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In Alabama, the minimum “bodily injury”  insurance coverage is $25,000.00.  So, what if another driver crashes into you and causes significant personal injury and only has the minimum coverage?  Well, you can either hope the other driver is independently wealthy so that if you obtain a jury verdict in excess of $25,000.00, you can collect the excess from him personally, OR you can have “Uninsured Motorist” coverage on your own policy.

How does that work you might ask?  Well, I’ll be glad to answer.  Let’s say the at-fault driver’s insurance company, State Farm for example, has offered to settle for the policy limits of $25,000.00.  You MUST ask for a certified copy of the declarations page which will confirm that $25,000 is all of the coverage available (you don’t want to settle and let them off the hook for less if they have more).

Now, before you accept the $25,000.00, you must notify your own insurance company, let’s say Allstate, that State Farm has offered the policy limits.  At that point, you have to give Allstate time (30 days typically) to decide whether or not to waive their right of subrogation, OR pay the underlying limit.  Assuming you have $50,000.00 of uninsured motorist (“UM”) coverage, it works like this:

  1. Allstate can agree to waive their subrogation rights, their right to pursue the at-fault driver if they have to pay you any UM under your policy, i.e.: State Farm pays you the $25,000.00, and if Allstate pays you $10,0000 on top of State Farm’s $25,000, Allstate can pursue the at-fault driver personally for the $10,000 (State Farm will never pay the $25,000 if Allstate does not waive this right), OR
  2. Allstate can pay State Farm’s $25,000 to you and tell you to pursue the at-fault driver for the rest.  In that event, you get the $25,000, and you sue the at-fault driver.  If you get a verdict over $25,000 and up to $75,000, you will collect the first $25,000 from the at-fault driver, i.e.: if the verdict is $25,000, you get $0 because Allstate already paid you $25,000, and now, State Farm has to pay Allstate back it’s $25,000; if the verdict is $50,000, State Farm pays you $25,000 (you already got $25k from Allstate); and if the verdict is $75,000, State Farm pays you $25,000, and Allstate pays you $25,000; and if the verdict exceeds $75,000, you have a judgment against the at-fault driver personally for any amount over the $75,000 you receive from State Farm and Allstate, AND Allstate can still pursue the at-fault driver for the $50,000 it paid in your uninsured motorist benefits.

I know this is all highly confusing.  Essentially, your own insurance company can pay the other driver’s policy limits, opt out of the case and force you and the other driver to litigate the case.  If you would like a case explaining this “opt out” concept, click here.

As a firm, we highly recommend that you carry a minimum of $100,000 of uninsured motorist coverage.  We have seen far to many uninsured drivers and underinsured drivers in the State of Alabama.  This coverage is one of the more reasonable premiums there is, and it should never be rejected.

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