A new law just went into effect in Maryland which dramatically changes the way your car insurance works. This law will be of enormous benefit to you if you ever need to pursue your own car insurance company for damages after a car accident
However, the politicians and insurance industry lobbyists made it somewhat difficult for you to get the benefits of this law. You have to do some very specific things to be covered properly. We will explain all the details in this post.
The new law gives you Enhanced Underinsured Motorist Coverage, or EUIM for short. What an exciting name huh? I bet your finger is already hovering over the mouse ready to click away. Well don’t. Because this could be very important to you.
The Problem with Underinsured Motorist Insurance
If you look at your car insurance policy’s declarations page, you will see a line for “uninsured motorist” (it may be abbreviated “UM” or “UM/UIM”). That is the insurance coverage you have if you get hit by a driver with no insurance, or too little insurance. Read this post to learn all about the complex world of uninsured motorist coverage and how it works.
Here is the current problem in a nutshell: Most people think they can claim the full amount of their uninsured motorist policy if they are hit by another driver with too little insurance. Most people think they can stack their coverage on top of the other driver’s coverage – adding them together. But that is not true.
Uninsured motorist coverage only makes up the difference between the other driver’s insurance limits and your insurance limits, but to a maximum value of your policy limits. So, if the other driver has $30,000 liability insurance, and you have $100,000 in UM coverage through your own car insurance policy, then you can only get, at most, $70,000 from your policy. Your policy covers the shortfall to get you to the total value of your limits – but no higher. I explain how this works in this blog post.
The Fix – Enhancing Your Insurance
Enhanced underinsured motorist coverage fixes that problem. If you elect to get this new coverage, you can then add the full value of your insurance policy to the other driver’s insurance policy. In the example above, you can now add them together to get a total of $130,000.
The trick is you have to elect this enhanced coverage when you sign up for, or renew, your car insurance. It is not automatic. It is an extra coverage, and the insurer can charge you more for it. It remains to be seen how much more they will charge.
As of October 1, 2017, this Enhanced Underinsured Motorist Coverage is available if you buy new car insurance or renew your old policy. But nobody has to tell you about it. You have to be the wise consumer. As of June 1, 2018, your insurer has to notify you of this option, and they have to give you a state approved form you will use to select it.
Maryland’s Insurance Administration already has a draft of the form on their website. Shocker! It is complicated and full of legalese. I have a feeling most people won’t understand what they are being offered, and will fail to elect it because it costs a bit more. That will be a huge mistake. I hope by publicizing this new law, our clients won’t make that mistake.
Why You Should Get Enhanced Coverage
I have been dealing with underinsured motorist claims my whole career. It is still relatively rare for someone to get hit by a completely uninsured motorist. It happens – but not often. However, it is becoming almost common that I have cases against underinsured motorists. I often have to make claims against my client’s own insurance carrier for their UM/UIM coverage. I think it is because of the bad economy of the last 10 years. People are being cheap on their car insurance.
It is perfectly legal in Maryland to drive around with only $30,000 in liability insurance. That is ridiculously low in this day and age (but actually in line with other states, to be fair). Medical costs are through the roof, and $30,000 doesn’t even cover a medium size car accident case.
When I encounter this, which is quite often, the only other place to find insurance is through your car insurance policy – through your own uninsured/underinsured motorist coverage. If you don’t have it, or you don’t have enough of it, you are going to be out of luck in your car accident case.
This can have dramatic effects. Medical bills can take up that entire $30,000 you get from the other driver. And if your health insurer pays for them, they get their money back. And they get their money back even if you get nothing! See all about liens in this post to understand why.
This stinks! But that is the current (very unfair) state of the law right now. Congress could fix this, but they are deep in the pockets of the insurance companies. Also, they can’t agree on what color the sky is. How are they going to fix the unfairness in this law?
All you can do is protect yourself. And you can protect yourself by electing to get Enhanced Underinsured Motorist Coverage on your own insurance policy. I strongly recommend you do so when you renew your car insurance. It will make a huge difference to you if you are ever in this unfortunate situation.
Share this post with your friends and family. Nobody is talking about this new law. People are going to lose out simply because they just don’t know about it.