Recent Case May Affect Your Recovery of Uninsured Motorist (UM) Insurance

When you purchase automobile insurance, Louisiana law requires that your insurance carrier also offer you Uninsured or Underinsured Motorist (UM) coverage. Unless you sign a specific form to waive that coverage, it’s part of your policy. This means that if you are injured in an auto accident by someone with no liability insurance or not enough to cover your damages, your own UM coverage will apply to make up the difference, up to the limits of your policy. Because too many drivers on our roads don’t have adequate liability insurance to cover serious injuries, UM coverage is critical to protecting you and your family after an accident.

Although the concept of UM coverage seems simple enough, courts have often struggled to decide when it applies in situations where there are multiple parties at fault or multiple layers of insurance coverage. For example, what happens when the person at fault is on the job when the accident occurs and his employer pays a part of your damages? Should these payments reduce the limits of what your UM policy should pay?

In a recent decision in Illinois, the Court found that payments by the defendant driver’s employer did not count against the injured party’s UM coverage. DeStefano v. Farmers Auto. Ins. Assoc., 2016 Ill. App. (5th) 150325, 55 N.E.3d 677. In that case, a driver for the U.S. Post Office drove his truck off the road during a postal route and crossed a family driveway where he struck a young girl operating a motorcycle, causing her life-threatening injuries.

The postal worker was found to be 100% at fault, and his personal liability insurer paid its full coverage limit of $25,000. His employer, the United States Post Office, also agreed to settle with the victim’s family for $49,900. The girl’s family carried $100,000 of UM insurance. A question therefore arose as to how much of the $100,000 UM coverage was left to compensate for the girl's injuries.

Under Illinois law (and many other states outside of Louisiana), payment by a liability insurer reduces the available UM coverage, meaning that the victim’s UM coverage in this case was reduced from $100,000 to $75,000 due to the payment by the driver’s personal liability policy. But what about the payment by the Post Office? The family’s UM insurance carrier argued that its responsibility should also be reduced by that settlement as well, leaving only $25,100 of the $100,000 policy limits.

The Court, however, found that the settlement by the Post Office was not made on behalf of the driver at fault, but for the Post Office’s independent responsibility. The victim’s family had claimed that the accident occurred not only because of the driver’s ill-advised decision to travel off-road and failure to see the motorcycle, but because of the Post Office’s failure to enforce its own rules and regulations about vehicle operation. Because the $49,900 settlement by the Post Office was paid to settle claims for its own fault—not its driver’s fault—this amount could not be used to reduce or offset the available UM coverage.

The Court also noted that this result was consistent with the reason we have UM coverage laws at all: to attempt to place the victim in the same position she would have been had the at-fault driver had adequate insurance.

As an Illinois court decision, this decision does not immediately impact Louisiana law. However, Louisiana courts do frequently look to other states when addressing complex questions, so cases like this one are important in understanding the complete legal landscape. At Thornhill Law Firm, we make an ongoing effort to keep up with changes in the law that may affect our clients as unique issues like this can arise in almost any case. You can be sure that the insurance companies are aware of these changes, and your attorney should be armed with that knowledge too.

If you have a claim for injuries as a result of an auto accident with an uninsured or underinsured driver, call us today.