California’s Uninsured Motorist Act (Insurance Code Section 11580, et seq.) requires that every automobile liability insurance policy include uninsured and underinsured motorist coverage, a type of bodily injury insurance designed to compensate the insured for damage inflicted by a financially irresponsible motorist. Underinsured motorist coverage applies when bodily injury is caused by an “underinsured motor vehicle” – a vehicle that is insured, but in an amount less than the uninsured motorist limits carried on the injured person’s vehicle (Insurance Code Section 11580.2(p)(2)). Underinsured motorist coverage will not apply until the limits of bodily injury liability policies applicable to all motor vehicles causing the injury have been exhausted by payment of judgments or settlements.
The Statute of Limitations (the time within which one must file a lawsuit against the uninsured motorist or demand arbitration in writing of one’s uninsured motorist claim with one’s own insurance carrier) for uninsured motorist claims is 2 years from the date of injury. The right to coverage under the underinsured motorist provisions does not accrue (arrive) until the defendant driver’s limits of coverage have been exhausted. There is no specific statutory limit on the amount of time the insured may take to pursue an underinsured motorist claim once the defendant’s insurer has paid the insured. The California Supreme Court so held in Quintano v. Mercury Casualty Insurance Company (1995) 11 C4th 1297. It is implied in Quintano that the underinsured claim must be brought within a “reasonable time” following conclusion of the claim or lawsuit against the defendant.
The difference in time limits between the two types of claims is crucial: the 2 year time limit for uninsured motorist claims is absolute, while the time limit for the underinsured claim is open-ended, dependent on when the underlying defendant’s policy limits are exhausted and paid.
A recent matter handled by Janssen Malloy LLP illustrates the point. Our client was injured in a motor vehicle collision in which she sustained a knee injury that ultimately required surgical intervention. The defendant driver who caused the incident and injury had only a $30,000 bodily injury policy limit. Our client had a $100,000 underinsured coverage with her own insurance carrier. After resolving the underlying claim with the defendant’s insurance carrier for their $30,000 limits, we proceeded to litigate the underinsured claim with our client’s own insurer for the remaining $70,000 in underinsured coverage (her carrier getting a set-off or credit for the underlying $30,000 settlement). The case with the defendant’s insurer was resolved within the 2 year statute of limitations for personal injury actions, and the demand for arbitration of her underinsured claim with her own insurer was timely done after settlement with the first insurance carrier. Ultimately, our client’s own insurer agreed to pay the full $70,000 in coverage available to satisfy her demand for compensation under the policy. Her full recovery was therefore $100,000.
Properly handling and resolving cases that involve both uninsured and underinsured claims requires experienced and assertive counsel to achieve the full measure of compensation that injured clients deserve. The attorneys at Janssen Malloy LLP stand ready to assist you or your family if the need arises.