MY CAR INSURANCE COVERAGE
By J. Thomas Mihalczo III
In this three-part blog series, I will give a brief overview of automobile insurance that every Missouri driver should have and should know about. My intentions are for every insured driver to become more aware of the interactions between their policies and how the coverages, and limits to those coverages, affects a person injured in a motor vehicle accident and their potential recovery.
Part I of this blog will briefly address the types of car insurance coverages in Missouri, including the required liability limits and how those limits apply and interact in a typical car accident. In subsequent blog installments:
Part II will examine the practice of “stacking” insurance policies, which surrounds an insured’s ability to obtain multiple insurance coverage benefits for an injury either from more than one policy, as where the insured has two or more separate vehicles under separate policies, or from multiple coverages provided for within a single policy, as when an insured has one policy which covers more than one vehicle. [i]
Part III will detail “setoffs”, which are provisions of an automobile insurance policy which seeks to reduce coverage by amounts recovered by the insured from other insurance.[ii]
Types of Automobile Insurance Coverage
First and foremost, all motorists traveling in Missouri are supposed to carry at least some liability insurance. [iii]All too often, however, a motorist either has no insurance or not enough liability insurance to cover the losses he caused in the accident.[iv] As we will see, the differences in the types of coverage you may personally have can drastically affect the potential recovery available to you if you were injured in a car accident.
Moreover, a frightening statistic is that it is estimated that 14 percent of Missouri drivers lack insurance altogether, even though state law requires all vehicle drivers and owners to maintain a minimum amount of liability and uninsured motorist coverage.[v] Found in §303.190 RSMo, those minimum required amounts are specifically divided by “25/50/10” or
· §25,000 per person for bodily injury
· $50,000 per accident for bodily injury
· $10,000 per accident for property[vi]
These limits can be problematic as many accidents result in damages which exceed these limitations. For questions concerning your own liability limits, this information is generally located on a “Declarations Page” of your insurance policy, for a better understanding follow the link to Understanding Your Declarations Page.[vii]
Uninsured Coverage (UM):
In addition to the required minimum liability insurance, Missouri law also requires a minimum amount of “uninsured” motorist coverage of $25,000 per person and $50,000 per accident for bodily injury.viii] This is not a separate policy or provision that the insured has to purchase, as an insurance company cannot issue a contract of automobile liability coverage in Missouri without including uninsured motorist coverage on the policy.[ix] Whether issued by the same insurer or different insurers, the public policy expressed in the statute mandates that each automobile liability policy contain at least the statutory minimum amount of uninsured motorist coverage.[x]
Uninsured motorist coverage, in contrast to liability coverage, is related to insured individuals rather than specific vehicles.[xi] Accordingly, uninsured motorist coverage protects against bodily injury caused by an uninsured motorist’s negligence.[xii]
This type of insurance coverage provides protections for Missouri drivers who are injured in a car crash with another individual who either does not have car insurance themselves, maintains liability insurance from a different state where the required minimum limits are less than those required in Missouri[xiii], or flees the scene of an accident, or a hit-and-run, and thus is unidentifiable. Essentially, uninsured motorist statutes are designed "to give persons who are injured by financially irresponsible motorists the same protection they would have had if they had been involved in an accident caused by a financially responsible motorist."[xiv] However, the “hit and run” scenario is the most common event which brings about the activation of uninsured coverage. When a motorist is uninsured or underinsured, the injured party's only hope for recovery may depend on her own insurance policy.[xv]
For example, Jeff is traveling westbound on Chippewa street after just picking up frozen custard from Ted Drewes, which he concretely placed in the passenger seat before safely departing from the parking lot. As he continues down Chippewa, he is abruptly T-boned by Casper, who had run a red light at the Chippewa- Jamison intersection. Casper, who has no interest in sticking around the scene of an accident, flees south on Jamison disappearing out of sight. Before Jeff can figure out what happened, Casper is gone and there is spilled custard all over his car.
In steps a lawsuit against an “uninsured” motorist. In Jeff’s lawsuit against Casper, he will be suing what insurance companies call a “phantom” vehicle, as Casper vanished from the scene, leaving Jeff without any idea who Casper was or more importantly what liability coverage he had. Jeff will ultimately be suing his own insurance company for the uninsured policy limits which he has purchased through his overarching liability coverage.
Underinsured Coverage (UIM):
The third type of insurance coverage is what is called “underinsured” motorist coverage. Unlike the previous two examples of liability and uninsured coverage, Missouri does not require drivers to maintain any underinsured motorist coverage at all. However, Missouri insurers typically make such coverage available: each of the ten companies with the largest market shares together representing over two-thirds of the market sells underinsured motorist coverage.[xvi] However, since underinsured coverage is optional, the Missouri law of contracts governs coverage disputes.[xvii]
Underinsurance coverage is floating insurance that follows the insured rather than a particular vehicle.[xviii] Therefore, maintaining underinsured motorist coverage allows an insured party to recover from their own insurance company when the damage sustained from an accident exceed the liability limits coverage of the negligent party. Thus, when a tortfeasor is liable for damages in the amount greater than their liability insurance, the injured party may rely on their own underinsured motorist coverage to help alleviate the financial burden resulting from the negligent persons’ inadequate liability coverage.[xix]
For example, if an insured party suffers a $50,000 in damages, and the negligent party maintains a $100,000 of liability insurance, the injured party is not underinsured.[xx] However, if that negligent party maintains the state minimum liability insurance, $25,000 as mentioned above, then that insured party is underinsured in the amount of $25,000.[xxi]
[i] Niswonger v. Farm Bureau Ins., 992 S.W.2d 308, 313 (Mo. App. E.D. 2009).
[ii] Mike Hamlin, Uninsured Motorist Offsets: When is the Insurer Entitled to a Setoff? Pitzer Snodgrass ( February 7, 2013), http://pspclaw.com/uninsured-motorist-offsets-insurer-entitled-setoff/.
[iii] Stephen R. Bough and M. Blake Heath, Current Issues In Underinsured Insurance Coverage In Missouri, 68 J. Mo. B. 208. ( 2012).
[v] See; The Missouri Department of Insurance, Financial Institutions and Professional Registration, https://insurance.mo.gov/consumers/auto/documents/AutoGuide3-1-17.pdf.
[vi] See §303.025. RSMo; § 303.190, RSMo.
[vii] Mo. Dep.Ins., supra note 5.
[viii] See § 379.203.
[ix] Missouri Department of Insurance, Uninsured Motorist FAQ, https://insurance.mo.gov/consumers/faq/autofaqs.php#auto-um-buy
[x] Bough, supra note 3.
[xi] Thomas D. Bixby, Resolving a Peculiar Paradox: Uninsured Motorist Coverage Applied to an Underinsured Tortfeasor, 62 Mo. L. Rev. 591, 591, 606 (1997).
[xiii] David W. Reynolds, Modernizing Underinsured Motorist Coverage in Missouri: Removing the Insurance Paradox Between uninsured and underinsured coverage via legislative action, 57 St. Louis L.J. 1049. (2013).
[xiv] Bixby, supra note 11.
[xv] Bough, supra note 3.
[xvi] Niswonger v. Farm Bureau Ins., 992 S.W.2d 308, 313 (Mo. App. E.D. 2009).
[xvii] Reynolds, supra note 13
[xviii] Stephen R. Bough and M. Blake Heath, Current issues in underinsured and uninsured insurance coverage in
[xix] Mo. Dep. Ins, supra Note 9.