What happened?

A third-party vehicle side-swiped a client’s truck. It was a low-speed incident that did not result in any injuries. As you would expect, the third party did not have any insurance. My client’s driver did not report any injuries. Several months later, a demand letter came from an attorney representing my client’s driver. To make things more interesting, this driver is currently employed and actively running a load when my client receives this letter. Crazy times we live in.

What most likely happened is a plaintiff’s attorney found the accident report, saw it was an accident with an uninsured motorist, and reached out to my client’s driver saying “I can get you paid and it won’t even come out of your boss’s pocket”.

Thankfully, as my client’s agent, I have been down this road before, and we had uninsured motorists and PIP (personal injury protection) excluded from the policy. We sent the demand to the insurance company, the insurance sent a denial letter, and we never heard from the attorney again.

This is a simple game of plaintiff attorneys scraping accident report data, prospecting the company drivers, and seeking out easy money. Unfortunately, if you have the coverage, insurance will most likely pay without a fight, even if the driver is covered on worker’s compensation.

A lot of companies are vulnerable

Many insurance agents do not know of this issue and will include $1,000,000 of uninsured motorist coverage on your policy. This is a sitting duck waiting to be exploited.

What is Uninsured motorist coverage?

Uninsured motorists (UM) coverage applies to bodily injury and, in some states, property damage incurred by an insured when an auto accident is caused by a motorist who is not insured.

The downside of excluding Uninsured motorist coverage

There are two potential downsides of excluding uninsured motorist coverage:

1. In most cases, uninsured motorist coverage has a $0 or only a few hundred dollar deductible. If you reject the coverage and a third party is at fault without insurance, then that claim will be subject to the collision deductible on your policy which will be a greater out-of-pocket expense.

2. If owners/officers have their personal vehicles on the policy and they have excluded themselves from workers comp and or have a high health insurance deductible then a claim involving that owner/officer could have a higher out-of-pocket expense. This does not apply to employees because any true injury will be covered by workers compensation.

In my opinion, most companies benefit from rejecting uninsured motorist bodily injury coverage.

Disclaimer

This can be a complicated issue and the law/coverage around uninsured motorist coverage varies by state. We are not attorneys and cannot offer legal advice. You should consult with an attorney before making any policy or procedure changes.

If you have questions or would like me to review your policy, call (501) 581-7226 or email [email protected]