Maryland passed a law not long ago that allowed for “stacking” of underinsured motorist coverage in your car insurance policy. This dramatically changes the way your car insurance works.
But you have to know about it, and choose it if you want it. The insurer does not want you to choose this option, and they do a pretty good job of hiding it from you.
This law will be of enormous benefit to you if you ever get into a car accident and find out the at fault driver had a small insurance policy that won’t cover your damages in a personal injury case.
However, the politicians and insurance industry lobbyists made it difficult for you to get the benefits of this law. You have to know about it to ask for it, and you have to do some very specific things to be covered properly.
We will explain all the details in this post. And we will explain exactly what you should do at the end of it. So scroll there now if you just want the step by step instructions.
What Is The New Law?
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 go away yet! Because this could be very important to you.
If you are in a car accident and suffer a personal injury as a result, this “extra” insurance coverage could be extremely valuable to you.
This law became available in late 2017, but the insurers didn’t have to actually tell you about it. As of July 2018, they must give you a specific form on which you can make choices about getting this coverage. At the bottom of this post we explain exactly which choices you should make.
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 into a car accident with a driver with no insurance, or too little insurance.
Nobody thinks about UM or UIM coverage. Many of you probably had no idea you have it available to you. But in a world where people drive around with very small insurance policies, it can be very important if you get into an accident. 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 that if they get into a car accident and suffer a personal injury, they can claim the full amount of their underinsured motorist policy if the at fault driver has too little insurance. Most people think they can stack their underinsured motorist 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 only 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. Read that post for all the details.
And if you didn’t think about UM or UIM insurance, and you didn’t bother to get higher limits for your own policy, you may be stuck with the adverse driver’s very low policy limits.
I have had several case where my client had no choice but to take a very low policy because there was nothing else available. Technically, you can sue the at fault driver for the difference – but that is often unproductive because the whole reason they have a small insurance policy is because they don’t have any money or assets. That makes them essentially judgment proof. You can’t squeeze water from a rock!
The Fix – Enhance 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 this:
You must 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.
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. Your insurer does have to notify you of this option, and they have to give you a state approved form you will use to select it. But most people overlook it.
Here is the state approved form along with the latest Md Insurance Administration bulletin giving guidance to insurance companies. The bulletin is first but the form is attached, so scroll down to page 3 to see the form your insurer is going to offer you.
Shocker! This form is complicated and full of legalese. (So scroll down to see our instructions on exactly what to do with it.)
I have a feeling most people won’t understand what they are being offered. I worry people will fail to elect enhanced underinsured motorist coverage 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.
Also, the bulletin here says they do not have to offer this enhanced UIM coverage for renewals – only for new purchases of car insurance. I do not think that was the intent of the law. That might be changed and will probably be litigated.
For now, you have to be the wise consumer and demand this coverage. See below for our suggestions on exactly what to do.
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 that 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.
Here is the sad reality:
It is perfectly legal in Maryland to drive around with only $30,000 in liability insurance. That means a bad driver can cause a car accident that leads to serious personal injury, and there is only $30,00 to cover the damages.
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 our post explaining liens in personal injury cases to understand why.
Yes. 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?
What You Should Do Now
Here is exactly what you should do if you buy new insurance coverage, or renew your policy:
(1) Demand Coverage
Demand this new Enhanced Underinsured Motorist Coverage if your insurance company doesn’t offer it to you. As we explained above, the Maryland Insurance Administration is telling them they don’t have to offer it on renewals. That is wrong!
If they won’t offer EUIM coverage to you, then shop around for a better policy.
(2) Price Out Your Options
Before you get EUIM coverage, consider increasing your own insurance coverage. At least price this out and see what the cost really is.
Typically, your liability coverage limits and your uninsured/underinsured motorist limits are the same. So if you want to increase your underinsured motorist coverage, you should first look into increasing your personal liability limits.
We recommend everyone have at least $250,000 in liability coverage. The old rule of $100,000 just doesn’t cut it these days thanks to sky high medical bills.
If you get $250,00 in liability coverage and underinsured motorist coverage, you are pretty well protected for all but the worst car accidents.
At least find out what it would cost and give it consideration.
(3) Do NOT Select Option 2
Option 2 is to get UIM coverage, but for the state minimum level! A quirk in the law says they have to offer your underinsured motorist coverage, but only up to the state minimums.
So you can technically have $250,000 in liability coverage if a car accident is your fault, but only $30,000 in coverage if an uninsured or underinsured driver hits you.
You may save a few bucks by dropping your UIM coverage to $30,000, but you better be sure you only get into car accidents with well insured drivers.
(4) Get EUIM if you can afford it
Since this “extra” coverage is relatively new, the prices are all over the map. We cannot tell you how much this is going to cost.
However, as I have explained in this post, I can tell you that getting this coverage is going to be worth it if you are ever in a car accident and suffer serious personal injuries.
Conclusion & Next Steps
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.
Take the time to review your other insurance polices. For tips on how to do this see our post Insurance You Need (And Some You Don’t).
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.
Want to know more? Discover what you need to know about car accident cases in Maryland. Click here to see our Free Legal Consumer Guide to Maryland car accident cases and get answers to your questions today. Know your options. Be informed. Protect yourself.
Need a Personal Injury lawyer? Please contact us for a consultation today if you need a Maryland personal injury lawyer for your car accident case.
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