Q: The following excellent question was posted on www.avvo.com:
I was in a severe car accident as to which I was not at fault. However, I have a lawsuit going against the other driver, and may or may not be able to to be compensated by the other driver's (who was insured) insurance company. My question is, if I win my lawsuit against them, can I still file for an underinsured motorist claim with my insurance if the other driver has only the minimum limits of coverage required by law, but those limits are insufficient to compensate me fully for my injuries. Do the same terms apply if I lose my case?
Also, do I file an underinsured motorist claim before or after my case has been settled regardless of the outcome of the lawsuit?
A: Here's my answer to this most excellent question:
The rules are different in different states. In California (quoting from the Rutter Group California Practice Guide: Personal Injury):
"Underinsured motorist cases—consent not required: An insured's failure to obtain the insurer's consent to a settlement with (or judgment against) an underinsured motorist does not result in loss of the insured's underinsured motorist coverage. Reason: The insured cannot recover from his or her carrier until after the bodily injury limits of the tortfeasor's policy have been exhausted by settlement or judgment (Insurance Code Section 11580.2(p)(3)). The carrier could thwart the insured's ability to collect on the uninsured motorist coverage simply by refusing to consent to a settlement. Moreover, the carrier does not have a statutory subrogation right against the underinsured tortfeasor and thus does not need the protection of a consent provision. "
You should always put your carrier on notice of an accident and, assuming you have uninsured motorist coverage, reserve your right to make an uninsured or underinsured motorist claim.
For practical reasons it is my practice to always contact my client's automobile insurance carrier, open the claim, get my client's policy limits in writing, advise that we are going to make an Uninsured or Underinsured Motorist Claim and ask them to tell me, in writing, exactly what they will need in order to comply with their particular requirements for a UIM Claim.
So, bottom line: You will NOT waive your UIM claim just by settling with the other party's carrier. However, subject to very few exceptions, you MUST, absolutely MUST, exhaust their policy limits (not a single penny less) in order for your UIM Coverage to kick in. Speak to a lawyer — this is not something that anyone should handle on their own because the claims can be tricky.
I regularly handle Underinsured Motorist Claims for my clients. For various reasons, UIM Claims are a favorite of mine.