Maryland: PIP, Uninsured and Underinsured Motorist Coverage and Other Coverages Briefly Explained

You are probably familiar with your rights to recover compensation if you are injured in an auto accident. In most cases, you would assert a claim with the insurance company that carries a car insurance policy for the “at-fault” driver. Maryland insurance laws require all motorists to purchase a designated minimum amount of insurance coverage for bodily injury and property damage. This is because of a legal concept known as the “at-fault” rule, which states that any injured party can recover compensation from the negligent driver who was negligent. There are three scenarios, however, in which this rule becomes a problem for you as an injured victim:

• The other driver does not comply with state law on insurance requirements and is considered an uninsured motorist;
• Though the negligent driver complies with Maryland’s minimum auto insurance laws and has purchased the minimum amount of required insurance, your injuries are severe and exceed the available insurance coverage amount, or,
• The responsible motorist fled the scene of the accident, so you do not have the contact information necessary to file a claim with his or her insurance company.

In any of these situations, you could be left with significant medical bills and lost wages, in addition to pain and suffering and other losses. Recognizing the tough position this puts car accident victims in, Maryland has enacted another law that could allow you to obtain compensation when you cannot recover what you should from the negligent driver.

Key Definitions and Concepts in Insurance Coverage

Insurance terminology can be complicated, so it is important to understand the basics of definitions and legal concepts.

• Bodily Injury Coverage: This type of insurance covers damages that an injured victim incurs as a result of a car crash. You can file a claim for compensation with the other driver’s insurance company and could potentially receive up to the policy limit, either through settling your case or filing a lawsuit in court. Typically, you would also carry this coverage to protect you in the event you hurt someone else.
• Uninsured Motorist: When drivers do not have any car insurance, they are considered uninsured motorists, or UM for short.
• Underinsured Motorist: This category of drivers carries the required amount of insurance or perhaps less. The term underinsured applies to situations where the bodily injury/liability policy does not carry enough coverage to satisfy the losses caused by the negligent actor. For example, in serious auto collisions, your medical expenses may be higher than the amount of liability coverage available to you, and you could also lose wages for a long period of time. Plus, your pain and suffering may be considerable. In such a situation, the insurance and/or personal assets of the tortfeasor may be insufficient to cover your losses. When the adverse insurance coverage is insufficient, you face an underinsured motorist– “UIM” – situation.
• Personal Injury Protection (PIP) Coverage: PIP is a type of insurance coverage that Maryland insurers are required to provide to their policyholders unless they waive it in writing. Drivers who purchase this coverage can obtain compensation by filing a PIP claim with their own insurance company, so it can be useful in an accident with a UM or UIM.
• First-Party vs. Third-Party Insurance Claims: If you do file a PIP claim with your own insurance provider, this is a first-party claim because you have a direct business relationship with the insurer. Seeking compensation from the responsible driver’s insurance company is considered a third-party insurance claim.

Filing for PIP Coverage

If you did not sign a PIP waiver when you bought auto insurance, you can file a first-party claim with your own insurance company. Passengers in your vehicle, family members who live in your household, and drivers you permit to use your car would also be covered under PIP provisions. Therefore:

• You would file a first-party PIP claim any time you are involved in a motor vehicle crash with an uninsured driver or someone who fled the scene.
• A PIP claim would also be an option if you were in an accident with an underinsured motorist and your losses exceeded the amount of coverage he or she carries. Note that Maryland’s minimum coverage amounts are $30,000 for bodily injuries and $60,000 for one or more injured victims. However, PIP generally has much lower mandatory limits. (Typically, $2500.00 minimum coverage is required). You could easily exceed this amount – and be on the hook for the rest of your losses – in a serious auto crash if no other coverage were available.
• In addition, you could file a PIP claim if you are not even in a car. You can seek compensation from your insurance company as a first-party claimant if you were on a bicycle or were walking when hit by a negligent UM or UIM.

Uninsured/Underinsured Motorist Claims in Maryland

Your first-party PIP insurance provides some protection if you are injured in a car accident with an Uninsured or Underinsured Motorist, but you may still need legal assistance in dealing with your insurer. Just like third-party claims, insurance companies frequently will do what they can to protect their financial interests. You could get a rejection or a lowball offer on your claim, even when you are dealing with your own insurance company. To hear more about your options, please contact us.