Los Angeles Uninsured Motorist Attorney Barry P. Goldberg has been advocating passage of California Assembly Bill AB 862 for over one year. That Bill has now moved from the Insurance Committee one step closer to becoming the law. That bill would finally authorize an insurer to offer a separately rated underinsured motorist policy where the maximum liability to the insurer is the underinsured motorist coverage limit. As stated in the language of the proposed amendment to Insurance Code section 11580.2, “the Legislature finds and declares that it is in the public interest that consumers have additional options available when purchasing automobile liability insurance.”
As Mr. Goldberg has previously pointed out in several articles, often an unfair result is created where the “at fault” party has insurance, but because of a multiplicity of injured claimants, each injured claimant receives a pro-rated amount, rather than the full available policy limit. In such cases, the accident victim not only receives less than he is entitled to from the third party, he loses much, if not all of the benefit of the Uninsured/Underinsured Motorist Coverage he had the foresight to purchase from his own insurer.
In addition, the proposed Bill provides its own examples to be provided to insurance customers as part of the amendment to Insurance Code section 11580.2:
“The California Insurance Code requires an insurer to provide uninsured motorists coverage in each bodily injury liability insurance policy it issues covering liability arising out of the ownership, maintenance, or use of a motor vehicle. Those provisions also permit an insurer to sell two kinds of underinsured motorist coverage: a “setoff” policy and a “nonsetoff” policy. Not all insurers offer both types of underinsured motorist coverage some will offer only “setoff” policies. You are receiving this notice because your insurer has elected to offer a “nonsetoff” policy in addition to offering a “setoff” policy. If you are covered by a “setoff” policy, the stated policy limit reflects the total coverage available to you when the insurancepolicy limit of the other driver, who was at fault, is added to your insurer’s contribution. For example, if the other driver, who was at fault, has a $25,000 insurance policy limit, and your “setoff” policy has a $100,000 limit, your insurer would be liable for up to $75,000. If the other driver, who was at fault, has a $50,000 insurance policy limit, your insurer would be liable for up to $50,000. In each example, the total available for your damages is$100,000, the policy limit of your underinsured motorist coverage, and the amount your insurer potentially has to pay varies depending on the amount of coverage the other driver has, even if your actual damages exceeded $100,000.
If you are covered by a “nonsetoff” policy, however, the stated policy limit reflects the amount of coverage available to you in addition to the insurance policy limit of the other driver, who was at fault. For example, if the other driver, who was at fault, has a $25,000 insurance policy, and your “nonsetoff” policy has a $100,000 limit, you would potentially be entitled to recover $25,000 from the insurance policy of the other driver, who was at fault, and $100,000 from your insurer under your “nonsetoff” policy. If the other driver, who was at fault, has a $50,000 insurance policy limit, you would potentially be entitled to recover $50,000 from the insurance policy of the other driver, who was at fault, and $100,000 from your insurer under your “nonsetoff” policy. In each example, you can potentially recover up to $100,000 from your insurer, and the total available for your damages will vary depending on the amount of coverage the other driver has. You are still subject to the $100,000 limit, but none of the $100,000 would be “offset” by the other driver’s insurance.” (Emphasis added.)
AB 862 is not a cure all for California’s broken Financial Responsibility Laws. It is simply a logical and practical first step which begins to acknowledge that the minimum liability limits are outdated and out of step with the costs of modern driving. At least a responsible California motorist should be able to insure against the “underinsured” epidemic caused by the Legislature’s complete failure to address the grossly inadequate minimum limits in the state.
The insurance industry opposes AB 862 citing that its insurance agents might get confused. In addition, the insurance industry contends that this is a “money grab” by consumer attorneys to get larger fees from recoveries made for policy holders! What the insurance industry forgets is that the policy holders are their own customers who paid for insurance and were damaged in at least the amount of their recoveries. Apparently, Insurers like the current “credit” or “set off” and enjoy the profit of selling an Uninsured Motorist Policy for a certain amount, and then possibly walking away or reducing that amount based on the happenstance of who caused the accident or how many vehicles were involved.
Mr. Goldberg still contends that the Bill is a logical first step in empowering responsible California motorists to be able to adequately insure themselves against the epidemic of uninsured and underinsured drivers in the State of California. In short, the Bill will allow California motorists to purchase “enhanced” Underinsured Motorist Coverage which will actually and predictably protect them and their family when involved in an accident wherein the adverse driver did not have sufficient liability insurance.
For more information about the article author and attorney Barry Goldberg’s uninsured and underinsured motorist expertise, please visit his web page, Los Angeles Uninsured Motorist Attorney. www.barrypgoldberg.com/
For a free consultation, Please call Barry P. Goldberg at (818)222-6994