Protecting Yourself and Your Family With Uninsured and Underinsured Motorist Coverage

I’ve seen it too often over the years: A victim of a car crash receives less compensation than they deserve because their recovery is limited to the limits of the at-fault driver’s motor vehicle insurance policy. The reason for this is that most people, and even some businesses, are what we call “judgment proof.”

Someone is judgment proof when they are insolvent, i.e., when their debts exceed their assets. Most judgments from a personal injury case (with some exceptions, such as injuries caused by a drunk driver) are dischargeable in bankruptcy. This means that if you obtain a judgment against someone who is judgment proof, they can simply declare bankruptcy and avoid paying anything more than what their insurance will cover.

The sad fact is, when facing an at-fault driver who is judgment proof, you’ll probably only be able to collect the limits of that person’s liability insurance policy. In Oregon, the current minimum motor vehicle liability insurance limits are $25,000 per person and $50,000 per accident. ORS 806.070(2). In this day and age, just spending a couple days in the hospital can cost more than $25,000.

However, there is a way to protect yourself. Every motor vehicle liability insurance policy in Oregon must include both uninsured and underinsured motorist coverage. ORS 742.502(1). The limits for your uninsured and underinsured motorist coverage must be the same as your limits for bodily injury liability coverage unless you specifically elect lower limits in writing. ORS 742.502(2)(a). When your policy limits are higher than the policy limits of the at-fault driver that caused you injury (and in certain other limited situations), underinsured motorist coverage kicks in and provides you additional protection.

For example, let’s say you are involved in a crash and you incur $100,000 in medical costs, but the at-fault driver is judgment proof and only has the minimum required insurance ($25,000 per person). Let’s also say that you’ve purchased motor vehicle insurance with liability limits of $100,000 and didn’t elect lower limits for your uninsured and underinsured motorist coverage. You would have another $75,000 available to you under your underinsured motorist coverage. A similar situation would arise if the at-fault driver had no insurance at all. You’d simply make the claim under your uninsured motorist coverage and would have the potential to recover up to $100,000.

Of course, purchasing higher policy limits costs more money, and in these difficult economic times we can only do what we can afford. But doubling or tripling your policy limits may not be as expensive as you think. Check with your insurance company and see what you can afford. That way, if the unthinkable happens, at least you’ll be prepared. Our office has substantial experience handling both uninsured and underinsured motorist claims and can answer any questions you may have.