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Alabama Supreme Court Takes Tough Stand on Uninsured Motorist Insurance
Underinsured motorist coverage is intended to protect people who are harmed by drivers with insufficient insurance, but these policies are subject to significant limitations in Alabama.
June 25, 2009 /Industrial PR News/ -- Alabama Supreme Court Takes Tough Stand on Uninsured Motorist Insurance
Article provided by Marsh, Rickard & Bryan, P.C.
Visit us at www.mrblaw.com
Insurance companies offer uninsured or underinsured motorist (UM or UIM) coverage to protect people harmed in automobile accidents by others who either have no insurance or coverage inadequate for the damage amount. Having UM/UIM coverage is seen as a financially prudent investment -- and it may seem to be especially so if you live in Alabama, if you look only at the statistics.
According to the Insurance Research Council, Alabama had the third highest percentage of uninsured motorists among US states in 2007, with an estimated 26 percent of the state's drivers uninsured. Unlike about half of the other states, Alabama does not mandate that motorists carry UM/UIM insurance. To make matters even worse in these dire economic times, as joblessness rises, so does the number of uninsured drivers.
So if you live, work or vacation in beautiful Alabama -- from the pristine Gulf Coast to cosmopolitan Birmingham to the northern mountains and canyons -- where about one-quarter of drivers do not have the insurance necessary to pay your damages in case of an accident that is their fault, you may decide that UM/UIM insurance coverage is a smart way to protect yourself and your family. Unfortunately, these policies may not provide the expected safety net in Alabama.
Kendall v. United Services Automobile Association
On May 15, 2009, the Alabama Supreme Court issued a decision with a rigid interpretation of Alabama UIM law. Because of this restrictive ruling, in some situations motor vehicle accident victims with UIM coverage may be unable to access the proceeds of those insurance policies to the full extent of their damages.
Rosalyn Kendall was driving on Highway 143 in Elmore County when she was struck by another vehicle, which was driven by a county employee who was out on county business. The county employee did not stop for a red light. The collision caused Kendall to suffer serious, permanent injuries that generated $175,000 in medical costs.
Alabama statute limits the amount of damages for which a governmental entity like Elmore County is liable to $100,000 for physical injury or death in an at-fault accident; Elmore County had a liability policy in that amount. The county offered to settle for the full $100,000 policy limit and Kendall accepted, leaving her with $75,000 in uncovered medical expenses.
Before the accident, Kendall had made the sensible decision to purchase uninsured and underinsured motorist coverage through United Services Automobile Association (USAA), a well established company providing insurance to those with military ties. Logically she turned to USAA for payment from the UM/UIM coverage of the outstanding $75,000 in expenses that exceeded the county damage limit.
Legal Entitlement to Recovery
USAA refused to pay, pointing to both the Alabama UM statute and the actual policy language that authorized payment of UM insurance proceeds only when the injured party is legally entitled to recover damages. USAA argued that the $100,000 statutory cap on damages meant that Kendall was not legally entitled to recover any more than the $100,000 settlement, even from her UM insurance coverage. Kendall sued USAA, but the trial court and then the Alabama Supreme Court on appeal agreed with USAA.
Ultimately Kendall was not allowed to collect the additional $75,000 in medical bills under her UM policy. The Supreme Court relied heavily on the plain language doctrine, that when the language of the law in question is plain and unambiguous, a court has no authority to interpret the words in any other way than their clearly intended meaning. The Court found "legally entitled to recover" to mean only the amount represented by the $100,000 cap on recovery from governmental entitles.
Interestingly and perhaps acknowledging the unfairness with which the case would probably be perceived, the Chief Justice concurred specially in the opinion, calling the case "difficult." She specifically called on the Alabama legislature to re-examine the UM law and the cap on governmental damages, and to "clarify whether it intended to allow for outcomes such as this." Time will tell.
A Split Among the States
The Alabama court is not alone in its view that when an at-fault driver has a legal limit placed on the amount of damages for which it can be liable, UM/UIM insurance may not cover any excess. Other states have taken similar positions and disallowed UM/UIM claims in these circumstances.
However, many have taken the opposite view and allowed victims to collect the excess damages from UM/UIM policies. In Oklahoma, for example, all the victim needs to show to be legally entitled to recover under UM/UIM coverage is that the other party is at fault, despite any cap on damages. The insurance company receives money for premiums in anticipation that it may have to pay if the insured is hit by an at-fault driver without sufficient coverage to make the victim whole; it should not matter if the reason for the inadequate resources is a law imposing damage caps, rather than insufficient insurance.
How is it fair to the undercompensated victim that the person who hit him or her just happened to be subject to some sort of legal cap on or immunity from damages? Why shouldn't the victim's attempt to protect him or herself from an underinsured motorist by purchasing UM/UIM coverage be honored when the reason for the lack of resources is caused by operation of law instead of by failure to obtain adequate insurance?
Legal Counsel Can Be Crucial
If you are the victim of a negligent or otherwise at-fault driver in Alabama, consult an experienced personal injury attorney as soon as possible for assistance in maximizing your recovery under your UM/UIM insurance coverage. A lawyer with a clear understanding of the evolution of these complex issues in the Alabama courts and legislature will be equipped to fight for your right to maximum recovery under the law.
Article provided by Marsh, Rickard & Bryan, P.C.
Visit us at www.mrblaw.com
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