Recently we discussed the numbers of uninsured (“UM”) and underinsured (“UIM”) motorists on Tennessee roadways. Because of this, it is important to make sure that your insurance policy covers you in case you suffer injuries caused by uninsured or underinsured motorists.
However, your insurance company may try to avoid paying your UM and UIM coverage. Your policy may have limits on the UM and UIM coverage. In Tennessee, there are two common limits to insurance UM and UIM premiums, offsets and subrogation.
If you or a loved one has been injured in an accident, and the at-fault driver has no insurance or inadequate insurance, you should speak with a local attorney who understands Tennessee policies and knows how to protect your rights. The Hartsoe Law Firm, P.C. takes car accident cases seriously and has successfully represented clients involved in accidents with uninsured and underinsured drivers.
Offsets: Poper ex rel. Poper v. Rollins
Tennessee Code Annotated § 56-7-1201(d) (“§ 1201(d)”) allows insurance companies to offset their UM or UIM payments against other claims that a policy holder may receive. For example, if you are injured in an accident because of the negligent driving of an uninsured motorist, and you sue the uninsured motorist, the insurance company can offset their coverage by the amount you receive from the lawsuit. The purpose of offsets is to prevent unjust enrichment where a policy holder may get paid twice.
The leading case for offsets in Tennessee is Poper ex rel. Poper v. Rollins. In this case, Linda Poper died in a multi-car accident. Her husband brought several wrongful death suits against the other drivers, and he also brought a products liability claim against the manufacturer of his wife’s car.
The husband settled with all the drivers except one, and he also settled with the manufacturer for a total of all settlements in the amount of $530,000. The remaining defendant had an insurance policy with a $10,000 limit. Instead of suing the other driver or his insurance company, the husband filed suit against his deceased wife’s insurance carrier for the UIM coverage in her policy in the amount of $100,000.
The insurance company moved to dismiss the claim, stating that § 1201(d) worked as a cap for the amount a policy holder could claim. The trial court and appellate court agreed, dismissing the case.
The Supreme Court of Tennessee, hearing the appeal, looked at the plain meaning of § 1201(d), which reads:
The limit of liability for an insurer providing uninsured motorist coverage under this section is the amount of that coverage as specified in the policy less the sum of the limits collectible under all liability and/or primary uninsured motorist insurance policies, bonds, and securities applicable to the bodily injury or death of the insured. (emphasis added)
The court held that an insurance company may offset all their UM and UIM coverage with all insurance payments, bonds, and securities that the claimant receives. Since the $530,000 amount exceeded the $100,000 of UIM coverage, the husband was not entitled to received the UIM coverage under his wife’s policy.
Subrogation Sherer v. Linginfelter
The other way an insurance carrier’s policy may limit payment for UM or UIM coverage is through subrogation. Subrogation is where an insurance carrier steps into the shoes of the policy holder and seeks reimbursement from the parties responsible for the accident when the policy holder has previously elected to take the UM or UIM payment.
The leading case on subrogation in Tennessee is Sherer v. Linginfelter. The plaintiff in Sherer v. Linginfelter was injured in an accident and brought a lawsuit against the uninsured motorist. The plaintiff was awarded $300,000 from the driver. The plaintiff also received $700,000 from her UM coverage in her policy. The plaintiff then brought a $30,000,000 products liability lawsuit against the manufacturer of her automobile because of injuries from a defective lap belt. The plaintiff then sought a declaratory judgment from the Tennessee courts, claiming that her insurance carrier did not have subrogation rights to any award from the products liability law suit.
Tenn. Code Ann. § 56-7-1202 provides that an insurance company may claim subrogation for UM or UIM coverage against the underinsured or uninsured motorist. However, the statute only allows recovery for the amount received from the parties that caused the same UM or UIM damage.
In Sherer v. Linginfelter, the Supreme Court of Tennessee held that any awards from the auto manufacturer were for “enhanced or additional” injuries related to the failure of the seat belt and not the actions of the uninsured motorist. The insurance company was not entitled to claim subrogation.
What You Should Know
The statutes under offsets are more broad, and an insurance company can offset their payments against your claims. However, the statutes under subrogation are more narrowly written and do not allow subrogation for “enhanced” claims. It is always recommended to have an attorney look at your policy and explain the consequences of the various clauses.
If you have been the injured in an accident due to the negligent acts of an uninsured or underinsured motorist, it is critical to speak with a local car accident attorney who will protect your rights.
Uninsured Motorists: A Growing Problem for Consumers, 2006, National Association of Insurance Commissioners
More Blog Entries:
Make Sure Your Tennessee Auto Insurance Policy Covers Uninsured and Underinsured Motorists, Especially If You Use Ride-Share Programs, May 7, 2014, Knoxville Injury Lawyer Blog
Tennessee Auto Insurance Myths and Misconceptions, Jul. 17, 2013, Knoxville Injury Lawyer Blog