I have written previously about the problems caused by Alabama drivers who don’t have liability insurance. Because of this issue, several legislators have worked to develop a system of instant verification. While important in keeping totally uninsured drivers off our roadways, instant verification does not completely resolve the problem. That system does nothing to resolve the problem created when a driver with insurance, but not enough insurance, causes an accident.
What if you suffered a disabling injury in a car accident caused by another driver? Suddenly, you cannot work and you are faced with huge medical bills. Then, on top of that, you discover that the other driver had only $50,000 in insurance coverage. That coverage is certainly not enough to compensate you for a disability that causes you to be unable to work for the rest of your life. In fact, it is not even enough to cover the bills you might incur by a significant course of medical care. What do you do?
If you have uninsured / underinsured coverage (often referred to as "UIM"), then you can receive compensation for your damages from your own insurance policy where the at-fault driver has no liability insurance or insufficient liability insurance. When the at-fault driver is totally uninsured, you can simply make a claim directly against your own carrier for this coverage. However, when the at-fault driver has some coverage, but not enough, the procedures are a little different. And, if you don’t follow the correct procedure, you will lose any right to receive this additional coverage. The Alabama Supreme Court recently issued a harsh reminder to anyone seeking benefits for injuries caused by an underinsured driver that the procedures must be followed.
So, what must you do to make a claim for UIM benefits when the at-fault driver does not carry enough insurance to cover your damages? Basically, before agreeing to any settlement with the at-fault driver (or his carrier), you must follow several procedures designed to notify your own UIM carrier and allow it time to both investigate the claim and determine how to proceed. Here is the exact question and answer from The Alabama Supreme Court:
Under Alabama law does the failure of an insured to give prior notice to his or her insurer of a proposed settlement and release of an alleged tortfeasor cause the insured to forfeit underinsured motorist coverage regardless of the insured’s actual knowledge of said coverage and regardless of prejudice to the insurer if the insured has possession of the policy which provides the coverage?
We answer this question in the affirmative.
Downey v. Travelers Property Casualty Insurance Company. Not only did The Alabama Supreme Court remind us of the procedure that must be followed, the Court also basically said there would be no exceptions or excuses allowed. This is an area where you can easily lose your right to additional insurance coverage. That is why it is very important to seek advice from someone who understands the issues involved in automobile collisions and insurance.