UNINSURED & UNDER-INSURED (“UM” & “UIM”) MOTORIST COVERAGE IN LOUISIANA
One of the most beneficial types of auto insurance coverage to have in Louisiana is uninsured motorist coverage. You can call on this coverage in your auto insurance policy when you are not at fault for the accident and have sustained damages caused by another driver who has no insurance, or whose insurance limits are insufficient to cover your damages. You can also use your uninsured motorist coverage if you are the victim of a hit and run accident or if you are injured by a vehicle as a pedestrian. Uninsured motorist coverage and under-insured motorist coverage is the same thing in Louisiana, so if you have uninsured motorist coverage you also have under-insured motorist coverage. This type of coverage is abbreviated as “UM” or “UIM” insurance. Any claim made under this insurance is known as a nonfault claim.
Uninsured motorist coverage is relatively inexpensive compared to the cost of liability coverage. Although the cost of uninsured motorist coverage has been increasing like all other auto insurance rates in Louisiana, comparatively speaking, uninsured motorist coverage is worth the cost considering the rising number of individuals driving without insurance because they cannot afford to pay their premiums. When I say uninsured insurance coverage is relatively inexpensive, I will give you my own personal frame of reference. For my Louisiana auto liability coverage, I personally pay $817.00 per year in premiums. For my uninsured motorist coverage, I pay $157.70 per year in premiums. To see if you have uninsured motorist coverage, you should check the declarations page of your auto insurance policy which you can download online or which you can get from your insurance agent.
RULE #1: MAKING A UNINSURED MOTORIST CLAIM CANNOT RAISE YOUR RATES AND YOUR INSURANCE COMPANY CANNOT DROP YOU
Most people are scared to make a claim against their own insurance fearing their auto insurance premiums will rise. In fact, one of the most common things we hear people say is: “I don’t want to make a claim against my own auto insurance.” Their concern is that if they make a claim against their own auto insurance their premium rates will increase. First, and most importantly, that is not true.
In Louisiana, there is a law that makes it illegal for an insurance company to raise your rates because you file a uninsured motorist claim as this is considered a nonfault claim. This law is found in La. R.S. 22:1284 which provides:
A. No insurer shall increase the rate, increase or add a surcharge, cancel, or fail to renew any policy of motor vehicle insurance when such action is based on consideration of one or more nonfault incidents.
B….”nonfault incident” means an accident, collision, or other incident involving a vehicle covered by a policy issued by the insurer in which the driver of the insured vehicle was not at fault, regardless of whether the incident was reported to any law enforcement agency.
A uninsured motorist claim is a nonfault incident as you can only call on this coverage when you are not at fault for the collision. Despite this clear law, our clients are often hesitant because even though we tell them the insurance company cannot raise their rates, they believe they will still do it because generally insurance companies do whatever they want. They also believe if they make a claim against their own insurance company they will get dropped. Neither of these beliefs are true, and Louisiana law protects you against both of these situations. If your insurance company does raise your rates after you make a uninsured motorist claim, they can be liable to you for a premium refund, damages and attorney’s fees.
La. R.S. 22:1284 provides:
C. Any insurer who violates this Section shall refund to the insured person the amount of premium which was paid which exceeded the premium which would have been charged if the insurer had complied with this Section, together with a penalty payment in amount equal to triple the amount of the refund or one thousand dollars, whichever is greater. The insured shall also be entitled to attorney fees should he prevail.
D. Notwithstanding any other provision of law to the contrary, one or more nonfault accidents or collisions shall not be the sole basis for an insurer’s denial of an application for a policy of motor vehicle insurance nor shall such an accident or collision be considered by an insurer in determining the rates for such a policy. In addition, no insurer shall require that such coverage be provided by another insurer based solely upon such an accident or collision.
In sum, if you are at fault for the accident and someone makes a claim against you and/or you have to use your coverage to pay for the damages you caused to someone else and/or your vehicle, the insurance company often does raise your rates. However, if you are not at fault for the collision and you file a claim against your own insurance for the damages someone else caused to you under the uninsured motorist coverage of your policy – your rates cannot be increased and your insurance company cannot drop you.
Despite all of the foregoing, we still have people who contact us who refuse to make a claim against their own insurance. Yes, the person who caused the damages should be responsible first and foremost, and we always pursue the person at fault and their insurance company as the first line of recovery. But, when the person who caused your damages has no insurance or their insurance limits are not enough to cover your damages, your uninsured motorist coverage is there to help you. It’s what you pay for, and making a uninsured motorist claim cannot negatively affect you under Louisiana law La. R.S. 22:1284 as it is illegal for the insurance company to raise your rates or drop you.
RULE #2: UNINSURED MOTORIST COVERAGE MUST BE OFFERED TO YOU BY YOUR INSURANCE COMPANY & THEY MUST PROVE YOU VALIDLY REJECTED IT
The fact of the matter is, most auto insurance companies do not make money off selling uninsured motorist coverage. It’s even been said most insurance companies discourage their agents from selling uninsured motorist coverage to individuals because it’s not profitable for the insurance company. We hear all too often people did not purchase uninsured motorist coverage because their agent told them they did not need it. This is simply not true.
You need uninsured motorist coverage. For example, you are driving down I-10, somebody rear-ends you going 70mph because they are texting and driving and your car is totaled. The person who hit you doesn’t have any insurance because they failed to pay their premiums. Where do you turn? Who is going to pay for your totaled vehicle? Who is going to pay for your ambulance bill and injuries? Technically the person who hit you is personally liable, but actually getting that person to pay rarely ever occurs unless the person is a wealthy individual.
The reason I say it rarely occurs is because in practice, most personal injury attorneys will not sue someone personally, even if that person is 100% responsible for the accident. It’s not that it cannot be done, it’s just usually a no-win situation considering the costs of obtaining a personal judgment and the likelihood of actually collecting on the personal judgment.
It costs money to pursue a claim against the person without insurance, and a formal judgment must be obtained from a court against the person which requires the attorney to put on evidence. If a personal judgment is obtained, the responsible party can file for bankruptcy and discharge the personal judgment as a debt. Only certain assets can be seized under a personal judgment, and if the person did not have insurance, it’s likely they do not have anything that can be seized to satisfy the personal judgment against them and person will be relieved of paying the personal judgment through bankruptcy protection.
Doesn’t seem fair does it? It’s not, and that is why you need uninsured motorist coverage. This very situation happened to my father. He was rear-ended by a young kid driving a vehicle he did not own and the owner of the vehicle did not have insurance. My father incurred more than $17,000 in hospital bills, and his new truck was totaled. Luckily he had uninsured motorist coverage which will not only pay for the damages to his truck, but also his medical bills.
Because it is the strong public policy of the law to protect citizens in Louisiana, your auto insurance company must offer you the option to purchase uninsured motorist coverage, and your insurance company must prove you “validly rejected” the coverage. This law was put in place to protect you against those insurance agents who mislead you as to the benefits of such coverage. If the insurance company cannot prove you validly rejected uninsured motorist coverage, then they must provide uninsured motorist coverage in the same amounts of limits to you as your liability coverage. In other words, it is technically possible for you to have uninsured motorist coverage even if you didn’t pay a premium for it and it is not listed on your policy.
At the Cardone Law Firm, when an insurance company says our client didn’t purchase uninsured motorist coverage, we make the insurance company submit the documents to prove it was validly rejected. We have even created new law on this issue, successfully recovering for clients who were not offered uninsured motorist coverage by their insurance companies. It’s always a good rule of thumb to double-check. I can tell you a story to demonstrate why.
We were consulting with one of our clients who was unaware of whether they had uninsured motorist coverage and the client could not find their declaration page so they called their agent. The agent told our client over the phone they did not have uninsured motorist coverage on their insurance policy and that he could not make a uninsured motorist claim. The client thought he had this coverage and thus we sent a written letter to the insurance company requesting the company prove our client had validly rejected uninsured motorist coverage. The insurance company wrote back providing a copy of the declaration page which proved our client had uninsured motorist coverage and had been paying for this coverage for the past 10 years. It saddens me to think about how many people have lost out on coverage because insurance representatives have either mistakenly or intentionally mislead their insureds about their uninsured motorist coverage.
What constitutes a “valid rejection?” That is a another blog post in and of itself, and is based on a number of factors which would require an in-depth analysis to lengthy for this blog entry. We provide free consultations on uninsured motorist coverage, so if you have a question about whether you have uninsured motorist coverage, we will consult with you at no charge. You can call our office at 504-522-3333 or reach out to us online at www.cardonelaw.com.
RULE #3: YOUR INSURANCE COMPANY MUST TIMELY ASSESS AND PAY YOUR UNINSURED MOTORIST CLAIM AND IF THEY FAIL TO DO SO, YOU CAN RECOVER ADDITIONAL PENALTIES
There are many laws which govern Louisiana uninsured motorist law, but some of the most important statutes are La. R.S. 22:1295 and La. R.S. 22:1973. These two laws frequently cited in UM litigation, relate to the
obligations of a UM carrier and the penalties available to
an insured if a UM carrier fails to timely handle a claim in a fair and reasonable manner. These two laws authorize penalties and/or attorney’s fees against automotive insurers in connection with their mishandling of UM claims. They are referred to by attorneys as the “bad faith” statutes.
Which law applies to your claim, depends on the facts, and in certain circumstances both laws can apply to your benefit. What you need to take away is that these laws require your insurance company to act timely when you make a UM claim. If your insurance company does not timely assess and pay your UM claim within the time limit provided by law, they can be responsible for penalties and attorney’s fees. One law requires your insurance company to assess and pay your UM claim within 30 days, and the other law allows the insurance company 60 days.
If your insurance company is refusing to pay your UM claim or timely assess it, it’s against the law. If you believe your UM carrier may be in violation of the duty it owes to you, we offer no obligation/free consultations. We will also help you to establish your claim by ensuring you timely file for your UM coverage, present proper proof of loss and do not prejudice your rights in any way.
The top things to know here are:
- You have 2 years in Louisiana to file a UM claim;
- You may have more than 1 available UM policy to use to your benefit depending on the circumstances. If you were driving another person’s vehicle you can make a UM claim against their UM policy as well as the UM policy you have on your vehicle;
- If you are injured in Louisiana, but live in another state, you can potentially prejudice/waive your rights under your UM policy by settling with the liable party without first obtaining the consent of your UM carrier;
- You must first present satisfactory “proof of loss” before the time clocks start ticking on the 30 or 60 day time limits;
- Satisfactory proof of loss is when the insurer receives sufficient facts to fully apprise it of the following:
- the uninsured or underinsured status of the owner or operator of the other vehicle involved in the accident;
- the fault of the owner or operator of the other vehicle;
- the damages resulting from such fault; and
- the extent of those damages.
- In some cases you may need an affidavit of no other insurance from the at fault driver;
- You should be aware your UM company may argue you waived your UM rights if you release the at fault driver without obtaining certain information. That is why you should always consult an attorney before signing a release or settlement document if you intend to pursue a UM claim.
Once you present proper proof of loss, your UM carrier is obligated to provide you with a unconditional tender which is the amount of your damages which cannot be disputed. An unconditional tender is beneficial because it allows you to pay bills as you incur them, and can even compensate you from time you miss from work, which are considered “lost wages”, due to your injuries. A UM carrier also owes you interest from the date of judicial demand until an unconditional tender is made.
Even if the insurance company who insures the person who caused the accident has not paid you for your damages, your UM carrier still must pay you assuming your damages exceed the liable party’s insurance limits. Put another way, your UM carrier has a higher duty to you. Your UM carrier must timely compensate you when your damages are in excess of the liable party’s limits, even when the liable party’s insurance company has not yet paid you.
In conclusion, making a UM claim is something you should not be scared to do. There are many laws in place to protect and benefit people who have UM claims, and often insurance companies do not abide by these rules. Insurance companies, as observed by my personal experience, typically attempt to discourage their insureds from purchasing UM coverage and from rightfully making payments due because they are focused on only making a profit. Filing a claim against your own insurance should not be dismissed, and you should fully explore all of your rights and benefits before refusing to do so. If you would like an assessment on whether you have a valid UM claim or whether you can pursue your own insurance company for damages someone else caused you, you can me at 504-522-3333 or reach me online at www.cardonelaw.com. I am attorney Hannah Salter, and with experience in UM claims, I am more than happy to take the time to talk you through the process.