A recent Louisiana Supreme Court decision suggests that uninsured drivers borrowing a car that is insured will not be covered by the policy’s uninsured motorist coverage for accidents not covered under normal liability coverage, particularly if the policy provides provisions for the car to be driven with the policy-holder’s permission. The case also has further implications about how uninsured motorist coverage will be honored in the state.
Policy-holders should be aware that uninsured drivers of their vehicle may not be entitled to protection under the policy’s uninsured or underinsured motorist clause. In most cases, this causes no difficulty because the vehicle’s normal policy is sufficient to cover all damages and the policy will protect a driver of the vehicle if the driver gave that person permission to use the vehicle. However, uninsured or underinsured motorist coverage cannot be used to cover shortfalls or gaps in the policy’s regular liability coverage in this case.
Under Louisiana law, the minimum required insurance is $15,000 for bodily injury to one person, $30,000 for total bodily injury, and $25,000 for property damage. Generally, under insurance policies, it is the automobile or motorcycle that is insured, not the person driving the vehicle.
In Green v. Johnson, Dave Paterson, was killed while driving a motorcycle he co-owned with Benjamin Gibson. Gibson had insurance on the motorcycle. He had liability limits set at $100,000/$300,000/$100,000. Gibson had selected lower levels for his uninsured or underinsured motorist coverage. The question in the case was whether Green was entitled to receive the policy’s uninsured or underinsured motorists coverage even though the policy’s liability provisions did not cover the accident in question.
The Louisiana Department of Insurance states that automobile liability insurance policies should include underinsured or uninsured bodily injury coverage to meet the same limits as the bodily injury coverage already in the policy (LSA-R.S. 22:680). The only exception to this rule occurs when a policy holder signs and completes a form specifically requesting for lower limits or selects for economic-only coverage.
Underinsured or uninsured motorist coverage is considered a contractual agreement. Gibson, who had insured the motorcycle, selected lower limits for his uninsured or underinsured motorist coverage. Because he selected these lower limits, he gave up his right to the automatic bodily injury coverage that he would have been legally entitled to had be not agreed to lower his limits. Only when an uninsured or underinsured motorist policy is absent from the coverage will the state apply the law that equal limits for uninsured or underinsured motorists obtain. In this case, it is important that individuals who seek out insurance make sure that they are not willingly giving up limits to insurance already protected to them under the law under a normal policy without underinsured or uninsured motorist stipulations.
Additionally, the court found that under the Gibson’s policy, Dave Paterson did not qualify as an uninsured person because he had express permission to use the motorcycle. For this reason, the normal provisions of the insurance obtained. He was legally insured by the policy.
This case means that drivers will likely have to take on more personal financial responsibility for medical bills, pain and suffering, or any rehabilitative care suffered by victims, especially in a case where regular liability coverage comes up short. Individuals also need to be aware of the limitations of their coverage when they sign up and be aware of what bills they may be responsible for should they get into an accident.
Finally individuals taking out coverage should make sure to read all the fine print to ensure that they understand precisely what kind of coverage they are paying for, who is covered, and what these coverage decisions can mean financially in the long run.
The CDC reports that the cost of motor vehicle accidents, injuries, and hospitalizations cost the country over $80 billion. With these high national bills, drivers should double check their policies to make sure they haven’t signed away additional coverage protected under Louisiana law.