We cannot express how crucial it is for you to have adequate insurance to protect you in an accident, regardless of fault. If you are at fault and cause a major accident with significant injuries, earlier this year, the minimum liability policy of $15,000/$30,000 is a drop in the bucket and could leave you exposed to an excess judgment. On the flip side, if you are not at fault and are seriously injured, you must protect yourself with underinsured coverage with the highest limits you can afford. Nevada has recently increased the minimum liability to $25,000/$50,000, which is a step in the right direction, but not enough. As far as uninsured/underinsured coverage, there is no mandatory requirement. It is up to you to make sure your policy has that important coverage.
There are a number of problems created with minimum liability coverage. When there are multiple claimants, there can be serious financial consequences to you if you do not carry sufficient underinsured coverage, even if the person who was at fault and hit you has more than the minimum policy.
For example, we see a lot of chain reaction rear-end collisions involving three or four vehicles, especially on the freeway. Let’s say for the sake of discussion that one driver caused all of the carnage because he was on his cell phone and slammed into the rear of the vehicle in front of him…..who happens to be you. You were stopped, but the force of the impact propels you into the vehicle in front of you, who in turn hits another vehicle. You have a passenger, and there are five people in the two cars in front of you. An ambulance comes and takes a couple of people away, but everybody is claiming injuries. The police arrive, you exchange information, and then after the emergency room, you consult with an attorney. The attorney finds out that the driver that caused the accident has $50,000/$100,000 coverage. You breathe a sigh of relief that it is not the minimum, but you are far from secure that you will be compensated fairly. That means that they will pay no one claimant more than $50,000, and will pay no more than $100,000 for all personal injury claims as a result of the accident. Between all the vehicles, there are seven claimants. Let’s assume everybody has the same bills and similar injuries…each person would get $14,285. That’s for everything. Your medical bills, lost wages, pain and suffering, and attorney’s fees. Suddenly that $50,000/$100,000 policy doesn’t look so good anymore. Most likely, however, the claims will be different in severity and medical expenses. What the insurance company does in these situations is they try to get everyone to send in their total medical expenses, and simply divide it on a pro rata basis. Then they wait until everyone agrees. In a best case scenario, everyone agrees and you receive a small amount due to multiple claimants. However, if you have underinsured benefits, you can then send them a demand, and none of the other claimants are entitled to that money because it is your policy.
What usually happens is that there are three or four lawyers representing the seven claimants, and either nobody agrees, or there is a potential claimant unrepresented who does not communicate with anyone. That is more common than resolving it quickly. The insurance company might pay the money into court and have the court decide, but nothing will happen as far as payments until the two-year statute of limitations expires. So in essence, one person, who either is not represented or is represented but does not do anything, can hold up the settlement for everybody else in the accident. Not only is the pot of money substantially less with multiple claimants, but it takes a long time to sort it out. The only way to avoid this scenario is to have underinsured coverage and try to settle with them while the other part against the at-fault driver’s insurance company is pending. Some insurance companies may estimate the offset (what you will receive from the at fault insurer), and evaluate and settle your claim. Others, however, will wait until it is resolved so they know exactly what you received. Even if you have to wait, at least you have your underinsured coverage to make up for the small amount you might receive from the other insurance company due to multiple claimants.
The bottom line is that these claims can be a nightmare for everyone, especially when one or more (or all) don’t have underinsured coverage, and they start fighting for every piece of a small pie because they have nowhere else to go to get compensated. Read: Traps to avoid in a personal injury claim.
Call your agent today to get underinsured coverage if you don’t have it already, and get as much as you can to avoid this situation. If you need help following your car accident, contact Craig P. Kenny & Associates today to speak with an experienced Las Vegas Car Accident Attorney!