Uninsured/Underinsured motorist or “UM” coverage is one of the most important coverages a person can buy.  State law requires all drivers to carry liability insurance, which is there to pay for property damage and personal injuries caused by the policyholder.  However, plenty of drivers violate that law every day and operate vehicles on the roads all over our state without carrying liability insurance at all.   Also, many people carry only the state-mandated minimum amount of liability coverage of $25,000.00.  If you are unfortunate enough to be involved in an accident caused by an uninsured driver or one who does not have enough liability coverage to compensate you for all your damages, UM coverage becomes critically important.

UM coverage is not mandatory under Oklahoma law.  You can choose to buy it or choose to reject it.  Your insurance company is required by law to offer UM coverage to you in the same amount as your liability coverage.  If you choose not to buy UM or to buy it in an amount less than your liability coverage, you must do so in writing on a statutory form your insurance agent provides you to sign.

Here is an example of how UM coverage might work in a common situation.  A UM policyholder is involved in an accident with a driver who has $25,000 in liability limits.  The UM policyholder is seriously injured, and ends up with medical bills of $50,000 from the accident.  The UM policy has $100,000 in policy benefits available to the policyholder.  The policyholder makes a claim to the UM carrier.  The UM carrier then has to fully and fairly investigate and even-handedly evaluate the claim.  To do so, the UM carrier must determine who was at fault for the accident (UM benefits are only available to the policyholder if the accident was the uninsured motorist’s fault) and the amount of the policyholder’s damages (like medical bills, lost wages, physical and mental pain and suffering, etc.)  If the UM carrier determines the accident was the policyholder’s fault or that the policyholder’s damages do not exceed the $25,000 in liability limits of the other driver, they will deny the claim.

There has been a great deal of bad faith litigation involving UM claims in Oklahoma.  The allegations by policyholders have ranged from unreasonable delay, to improper investigation, to under-evaluation of the policyholder’s damages, to reliance by the insurance company on biased experts, to improper policy langauge interpretation and so on.  A UM claim can be complicated (the adjuster must determine who caused the accident and the nature/extent of the policyholder’s damages – both questions can be nuanced and difficult) and there is a great deal of room for disagreement between the insurer and the policyholder.  An insurance company must take its duty of good faith very seriously and be proactive in its handling of a UM claim, or allegations of bad faith by the policyholder may very well follow.