CAIA Uninsured and Underinsured Motorist Claims 1 — Questions and Answers
Question 1: When an insured is injured by a hit-and-run driver, under which coverage would they typically file a claim with their own insurer?
- Collision coverage
- Uninsured motorist (UM) coverage (Correct answer)
- Medical payments coverage
- Comprehensive coverage
Correct answer: Uninsured motorist (UM) coverage
Uninsured motorist coverage applies when the at-fault driver is unknown (hit-and-run) or lacks liability insurance, allowing the insured to recover from their own carrier.
Question 2: What is the primary difference between Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage?
- UM covers property damage only; UIM covers bodily injury only
- UM applies when the at-fault driver has no liability insurance; UIM applies when the at-fault driver's limits are insufficient to cover damages (Correct answer)
- UM is mandatory in all states; UIM is optional in all states
- UM pays first-party claims; UIM pays third-party claims
Correct answer: UM applies when the at-fault driver has no liability insurance; UIM applies when the at-fault driver's limits are insufficient to cover damages
UM coverage responds when the tortfeasor carries no liability insurance, while UIM coverage responds when the tortfeasor's liability limits are inadequate to fully compensate the claimant's damages.
Question 3: In most states, before an insured can collect UIM benefits, they must first:
- File a lawsuit against their own insurer
- Exhaust or settle the at-fault driver's liability policy limits (Correct answer)
- Obtain a police report confirming the other driver's fault
- Submit to an independent medical examination
Correct answer: Exhaust or settle the at-fault driver's liability policy limits
UIM coverage is triggered only after the tortfeasor's liability limits have been exhausted, because UIM is designed to fill the gap between those limits and the insured's actual damages.
Question 4: An insured has UIM limits of $100,000. The at-fault driver had liability limits of $25,000 which were paid in full. The insured's total damages are $80,000. How much can the insured recover from their UIM coverage (assuming an offset state)?
- $80,000
- $55,000 (Correct answer)
- $100,000
- $25,000
Correct answer: $55,000
In an offset (or reduction) state, the UIM benefit is reduced by the liability amount received, so $80,000 damages minus $25,000 received = $55,000 UIM payment.
Question 5: Which of the following is a typical requirement before an insured settles with a third-party liability insurer for less than the full claim value in a UIM case?
- The insured must notify and obtain consent from their own UIM insurer (Correct answer)
- The insured must first exhaust all medical payments coverage
- The insured must submit a sworn proof of loss to the at-fault driver's insurer
- The insured must have the vehicle repaired before settlement
Correct answer: The insured must notify and obtain consent from their own UIM insurer
Most UIM policies require the insured to obtain the carrier's consent before settling with the at-fault driver's insurer to protect the UIM carrier's subrogation rights.
Question 6: Which statement about UM property damage (UMPD) coverage is correct?
- UMPD is mandatory in all 50 states
- UMPD covers damage to the insured's vehicle caused by an uninsured motorist and may have a deductible (Correct answer)
- UMPD has no deductible in any state
- UMPD always pays replacement value regardless of vehicle age
Correct answer: UMPD covers damage to the insured's vehicle caused by an uninsured motorist and may have a deductible
UMPD coverage pays for physical damage to the insured's vehicle caused by an uninsured motorist, and it commonly carries a deductible, though state laws vary on its availability and terms.
Question 7: What does 'stacking' refer to in the context of UM/UIM coverage?
- Adding collision and comprehensive to a UM/UIM policy
- Combining UM/UIM limits from multiple vehicles or policies to increase the total available coverage (Correct answer)
- Applying UM limits from the at-fault driver's insurer and the insured's insurer simultaneously
- Using medical payments coverage before UM/UIM coverage
Correct answer: Combining UM/UIM limits from multiple vehicles or policies to increase the total available coverage
Stacking allows an insured to combine UM/UIM coverage limits from multiple vehicles insured under the same or multiple policies, effectively increasing the total coverage available for a single claim.
CAIA Uninsured and Underinsured Motorist Claims 1
When an insured is injured by a hit-and-run driver, under which coverage would they typically file a claim with their own insurer?