New Delaware Law Modifies ‘Trigger’ for UIM Car Insurance

Drivers in Delaware with underinsured motorist coverage (UIM) who are injured in a crash are now more likely to be able to use that coverage, thanks to a legislative amendment passed there months ago that goes into effect today.

UIM coverage provides financial protection to policyholders when their hospital bills aren’t fully covered by the at-fault driver’s insurance. For example, if a victim in a crash had $60,000 in medical bills but the driver who caused the crash only had $50,000 worth of liability insurance, UIM would help pay for the remaining $10,000.

Previously, Delaware drivers would only be able to use UIM coverage if the UIM limit was higher than the responsible driver’s liability limit. But with the new change, drivers can access that UIM coverage regardless of the at-fault party’s liability coverage limits.

Under Delaware’s SB 61, an underinsured car is defined as a vehicle “for which there may be bodily injury liability coverage in effect, but the limits of bodily injury liability coverage … applicable at the time of the accident are less than the damages sustained by the insured.”

Policyholders who want to take full advantage of this new provision may want to renew their policies, according to a state trial lawyers association.

Bill Sponsor Says It Irons Out ‘Inequities’

Previous language in Delaware auto insurance laws defined an underinsured car as a car having bodily injury liability coverage involved in crashes where its limits “total less than the limits provided” by the UIM coverage.

Such language meant that an injured party’s UIM policy limits had to “be higher than the responsible party’s liability limits to be accessed,” according to Larry Kimmel, a partner at the Delaware-based Kimmel, Carter, Roman and Peltz.

The bill amended state law to “rectify these inequities” and bring them into line with state courts, according to the bill.

“Delaware courts have ruled that if the innocent victim and the negligent driver have the same policy limit or the victim’s policy limits are less than the negligent driver’s, then the negligent driver is not considered ‘underinsured’ even if the negligent driver’s policy limit is inadequate to compensate the innocent victims,” according to a statement from Sen. Harris McDowell, who sponsored SB 61.

State Attorneys Recommend UIM Policy Renewals

In the October issue of the Delaware Trial Lawyers Association’s (DTLA) Advocate, Kimmel recommended that personal injury attorneys push clients toward policy renewal “as soon as possible after Jan. 3, 2014 so that their policy will apply the new UIM law.”

“It would be unfortunate if a client came into your office with significant injuries from a motor vehicle accident after Jan. 3, 2014 but still had a policy issued prior to Jan. 3, 2014 and your client was not able to benefit from their new law,” Kimmel said.

SB 61 passed the state Senate and House in June and was signed into law by Gov. Jack Markell the following month. According to the SB 61’s language, the bill goes into effect six months after that enactment on July 3, 2013, meaning Jan. 3, 2014.

About Charles Nguyen
Charles Nguyen is an enterprising journalist who reported for Patch.com and the Desert Dispatch and was the editor in chief of the Guardian (the twice-weekly newspaper at the University of California, San Diego) before coming to Online Auto Insurance News.

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