However, insurance companies are deft at creating loopholes, and it’s important to have an experienced legal team review your policy before you settle. Many umbrella insurance policies don’t provide uninsured motorist or underinsured motorist coverage, or at least they give policyholders the option of declining it. Many states – including Florida – may require UM coverage in auto insurance policy (unless a policyholder expressly declines it in writing), but such restrictions aren’t extended to umbrella policies.
In Florida, that point was underscored in the 2009 case of O’Brien v. State Farm Mut. Automobile Ins. Co., where an umbrella insurer declined UM coverage to a man whose daughter was killed in a collision with an uninsured motorist. The same insurer provided auto insurance to the man, who expressly waived UM coverage as part of his auto insurance plan. The court ruled a separate waiver of UM coverage for his umbrella insurance plan wasn’t required.
The case stemmed from a motorcycle accident in which plaintiff, operator of the motorcycle, was struck by a negligent driver. Plaintiff was severely injured and suffered more than $250,000 in damages.
At the time of the crash, plaintiff was covered by two policies: One insurance the motorcycle, which provided up to $250,000 in uninsured motorist coverage, and another umbrella policy, providing liability coverage of up to $1 million per occurrence.
Negligent driver, meanwhile, had liability insurance that carried a maximum coverage amount of $100,000.
Plaintiff’s claim against negligent driver was settled for the policy limit of $100,000. Additionally, a claim for UIM benefits was settled with his own auto insurer for $150,000.
Plaintiff then sought coverage from his umbrella insurer, arguing he was entitled to $1 million in UM benefits, to be offset by the $250,000 he received from the two other insurers.
The court granted insurer’s motion for summary judgment, and plaintiff appealed.
Maine, like most states, makes UM coverage mandatory in auto insurance policies, even when the policy is silent as to the existence of it.
However, umbrella policies, the Maine Supreme Court decided, are a different matter. Umbrella insurance offers excess insurance coverage providing additional benefits over more than one policy. They require an insured to maintain and exhaust the underlying primary policy, and then if liability exceeds that, the umbrella policy will kick in.
Umbrella policies can include UM and UIM coverage, but as the Maine Supreme Court (and other courts in Florida) ruled, they don’t have to. Plaintiff argued that because he was legally required to maintain UM coverage in his regular policy under state law, his umbrella policy should extend UM coverage too.
The state high court disagreed.
Further, the umbrella policy covered up to $1 million for general liability, but only in the event insured was sued by someone else for his own negligence, not for injuries he incurred as a result of another person’s wrongful actions.
If you have been injured in an accident, contact the Hollander Law Firm at (888) 751-7770 for a free and confidential consultation. There is no fee unless we win.
Dickau v. Vermont Mut. Ins. Co. , Dec. 31, 2014, Maine Supreme Judicial Court
More Blog Entries:
Florida Motorcycle Injuries and Comparative Fault, Dec. 7, 2014, Boca Raton Accident Attorney Blog