Page 10 - Chris Book.docx

that the at fault driver is considered underinsured). Uninsured motorist

coverage comes in two forms: “add-on” and “difference in limits”
coverage. Here are some examples of how uninsured motorist coverage

works.
Example 1: Negligent Ned causes an accident and injures you. It
is later determined that Ned failed to pay his insurance premiums and his

insurance was cancelled. Ned is an “uninsured driver” and therefore you
may make a claim against your uninsured motorist policy for the damages.

Example 2: Ned causes an accident and injures you. Ned carries
the minimum state coverage of $25,000.00 per person, $50,000.00 per
occurrence. You, however, have $50,000.00 in damages. You carry

$25,000.00 in “add-on” uninsured motorist coverage. Therefore, you may
settle your claim against Ned on a “limited liability release,” meaning that
your insurance company may still go after Ned to repay them for the cost

of your claim on your uninsured motorist coverage. Then, you make a
claim against your uninsured motorist coverage for the remaining amount
of the damages, $25,000.00. Your insurance company will pay you the

$25,000.00 from your uninsured motorist coverage and will file an action
against Ned for damages that was paid under your policy. Here, the

insurance company would seek for Ned to pay $25,000.00.
However, if you carry “difference in limits” coverage, then you
may only make a claim for uninsured motorist coverage to the extent to

which your coverage exceeds Ned’s coverage. Therefore, if you only carry
$25,000.00 in difference in limits uninsured motorist coverage, then you

cannot collect against your uninsured motorist policy.
Potential Pitfall: It is very important that you place your
insurance company on notice of a potential uninsured or underinsured

motorist claim. Many insurance policies contain provisions that require

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