Are You Covered? Part 2: Look Carefully at ALL UIM Policies for Additional Coverage!
When a person who was injured in a crash reaches out to our law firm for help, one of the first things that we do is look for insurance coverage as sources of recovery. Often, the driver causing the injury does not have sufficient insurance coverage. So our firm looks at additional insurance policies for underinsured motorist coverage on 1. the vehicle occupied by our client; 2. any personal auto insurance policy where our client is a named insured; and 3. any auto policies for resident family members. If our client does not have access to the DEC sheet policy information, if we know the name of the insurance carrier and the name of the insured, we can discover the policy.
In North Carolina, the UIM exposure is pro rata (equal) between all of the UIM policies. In Virginia, there is a priority: 1. UIM policy on the occupied vehicle; 2. our client’s personal UM/UIM policies; 3. any “Resident Relative” UM/UIM policies. Each policy’s UIM coverage limit “stacks” for total UIM coverage for both VA and NC.
As previously mentioned in this blog, Virginia law recently changed. For all Virginia personal auto policies issued or renewed after July 1, 2023, the default rule is that UIM coverage STACKS ON TOP OF (in ADDITION to) liability coverage. However, if the insured decided to try to save a few bucks—in many cases, the savings are nominal (“penny wise, pound foolish”)—and elected the old version of UIM coverage, then the UIM coverage receives a credit for (REDUCED by) the liability coverage. The worst situation is when an insured elects to eliminate or reduce their UIM coverage below their liability limits.
So for Virginia policies, how do we know what coverage is available for our client? Usually, we can tell by looking at the DEC sheet. But if the DEC sheet is unclear as to whether the UIM coverage is the old UIM coverage or the new UIM coverage, then we have to look at the policy and the endorsements of the policy. When looking at DEC Sheets for UIM coverage, we look for one of the following endorsement numbers under Underinsured Motorist or Underinsured Motorist coverage, which may be at the bottom of the DEC sheet:
PP 14 03 07 23 – NEW Rules: UIM STACKS on top of (in ADDITION TO) all liability coverage.
PP 14 34 07 23: OLD Rules: UIM gets CREDIT for (DEDUCTION for) all liability coverage. (“Alternative Coverage”)
Here is the specific language from the Virginia State Corporation Commission Bureau of Insurance:
Explanatory Memorandum for AO 12165 Uninsured Motorists Coverage – Virginia form PP 14 03 07 23 and Uninsured Motorists Coverage (Alternative Coverage) – Virginia form PP 14 34 07 23 SERFF Tracking number ISOF-133562062 Endorsement form PP 14 03 07 23 Uninsured Motorists Coverage – Virginia was revised and endorsement form PP 14 34 07 23 Uninsured Motorists Coverage (Alternative Coverage) – Virginia was developed by Insurance Services Office, Inc. for adoption by the Bureau of Insurance as standard automobile forms in response to Chapter 308 of the 2022 Session of the General Assembly (Senate Bill 754) effective July 1, 2023.
Form PP 14 03 07 23 Uninsured Motorists Coverage – Virginia: This endorsement provides that any coverage that may be available subject to the provisions of the endorsement for damages caused by an underinsured motor vehicle shall be paid in addition to any bodily injury liability or property damage liability coverage available for payment. This endorsement also amends the Other Insurance provision to reflect that the priority of payments contained in paragraph B now apply to both uninsured motor vehicles and underinsured motor vehicles.
Form PP 14 34 07 23 Uninsured Motorist Coverage (Alternative Coverage) – Virginia: This endorsement provides that any coverage that may be available subject to the provisions of the endorsement for damages caused by an underinsured motor vehicle may be reduced by any bodily injury or property damage liability coverage available for payment. This alternative coverage option may be elected by the named insured with a specific request to their insurer and the request must be in writing.