CAIA Uninsured and Underinsured Motorist Claims 2 — Questions and Answers
Question 1: An adjuster receives a UM bodily injury claim involving a hit-and-run where no physical contact occurred. In many states, what additional requirement must the insured meet to qualify for UM benefits?
- The insured must have collision coverage on the vehicle
- There must be corroborating evidence or an independent witness to the accident (Correct answer)
- The insured must report the accident within 24 hours to police
- The insured must have uninsured motorist property damage coverage
Correct answer: There must be corroborating evidence or an independent witness to the accident
Many states require independent corroboration of the hit-and-run incident (such as a witness, police report evidence, or physical evidence) to prevent fraudulent phantom vehicle claims.
Question 2: When the insured's own insurer disputes liability in a UM/UIM claim, many states allow the parties to resolve the dispute through:
- Small claims court only
- Arbitration, as required by the insurance policy or state statute (Correct answer)
- A panel of three licensed adjusters
- The state Department of Motor Vehicles
Correct answer: Arbitration, as required by the insurance policy or state statute
UM/UIM policies commonly contain arbitration clauses, and many states mandate arbitration as the dispute resolution mechanism for coverage and liability disagreements between the insured and their own carrier.
Question 3: What is the primary purpose of the 'consent to settle' clause in a UIM policy?
- To give the insured permission to select their own attorney
- To protect the UIM insurer's potential subrogation rights against the at-fault party (Correct answer)
- To require the insured to accept any settlement offer from the at-fault driver
- To allow the UIM insurer to deny coverage if the insured rejects a reasonable settlement
Correct answer: To protect the UIM insurer's potential subrogation rights against the at-fault party
The consent-to-settle clause requires the UIM insurer's approval before settling with the tortfeasor so the insurer can preserve its right to pursue subrogation against the at-fault party after paying UIM benefits.
Question 4: In a 'non-offset' or 'add-on' UIM state, how are UIM benefits calculated when the at-fault driver's limits are $25,000 and the insured's UIM limit is $100,000?
- The insured receives $75,000 from UIM after the $25,000 liability payment
- The insured can receive up to $100,000 from UIM regardless of the liability payment received (Correct answer)
- The insured receives only $25,000 total from both coverages
- The insured must choose between liability and UIM payments
Correct answer: The insured can receive up to $100,000 from UIM regardless of the liability payment received
In an add-on (non-offset) state, UIM limits are not reduced by the liability payment received, so the insured could collect up to $100,000 in UIM benefits in addition to the $25,000 from the at-fault driver (subject to total damages).
Question 5: Which coverage applies when the insured is struck by a driver who has liability insurance, but those limits are less than the insured's damages?
- Uninsured Motorist (UM) coverage
- Underinsured Motorist (UIM) coverage (Correct answer)
- Medical Payments (MedPay) coverage
- Personal Injury Protection (PIP) coverage
Correct answer: Underinsured Motorist (UIM) coverage
Underinsured motorist (UIM) coverage applies when the at-fault driver carries liability insurance but those limits are insufficient to fully compensate the injured insured for their losses.
Question 6: When processing a UM/UIM claim, the adjuster must evaluate the at-fault driver's liability. Which standard does the adjuster typically apply?
- A stricter standard than would apply in a third-party claim
- The same negligence standard that would apply if the insured were suing the at-fault driver directly (Correct answer)
- An absolute liability standard regardless of driver conduct
- A no-fault standard regardless of state law
Correct answer: The same negligence standard that would apply if the insured were suing the at-fault driver directly
UM/UIM claims are evaluated using the same negligence and liability standards that would govern a lawsuit against the at-fault driver, since the insured essentially steps into the shoes of the tort claimant.
Question 7: A passenger injured in a vehicle operated by an uninsured driver may seek UM benefits under which policy?
- Only the vehicle owner's policy, never the passenger's own policy
- The passenger's own auto policy, if it extends UM coverage to the insured while occupying non-owned vehicles (Correct answer)
- Only the state uninsured motorist fund
- Only the driver's employer's policy
Correct answer: The passenger's own auto policy, if it extends UM coverage to the insured while occupying non-owned vehicles
Many UM policies extend coverage to the named insured and family members while occupying non-owned vehicles, allowing the injured passenger to seek UM benefits under their own auto policy.
CAIA Uninsured and Underinsured Motorist Claims 2
An adjuster receives a UM bodily injury claim involving a hit-and-run where no physical contact occurred.
In many states, what additional requirement must the insured meet to qualify for UM benefits?