Pursuant to Maryland’s Insurance Code, unless the policy holder waives coverage, every motor vehicle insurance policy written in the state of Maryland is required to include options for uninsured motorist (“UM”) and underinsured motorist (“UIM”) coverage. As indicated above, the policy purchaser is permitted by statute to waive said coverage, but policy writers may not refuse to underwrite a policy if the purchaser refuses to waive the UM or UIM coverage.
UM coverage applies when the policy holder is injured by a third-party tortfeasor who does not have insurance coverage. In that case, the policy holder is entitled to recover from her insurance carrier the damages she could have recovered from the third-party tortfeasor. The recovery is, of course, limited to the UM policy limits under the policy. UIM coverage applies when the insurance carrier’s policy holder is injured by a party that does have insurance coverage, but the policy limits are not sufficient to make the injured party whole. In that case, assuming coverage has not been waived, the injured party is entitled to recover the remaining damages from her insurance carrier (again, up to policy limits).
Often, when the policy holder brings suit against the third-party tortfeasor, if the plaintiff believes that the tortfeasor’s insurance coverage is insufficient, he will sue his own insurance carrier in the same action to recover UM/UIM benefits. This is not required, as Maryland statute expressly permits a subsequent action to recover UM/UIM benefits. The statute of limitations to bring a UM/UIM claim against the insurance carrier does not begin to run until: (1) the policy holder receives the full policy limits from the tortfeasor; or (2) the insurance carrier denies coverage. Therefore, potential UM/UIM claimants might have much more than the standard three years to file a UM/UIM claim in Maryland.
When and if a UM/UIM claim is actually made, it is contingent on the plaintiff proving she is entitled to damages that cannot be compensated by the tortfeasor. For uninsured motorists, this is relatively straightforward, as there is no coverage available. For a underinsured motorist, this requires a showing of proof (from a litigation standpoint). In order to be entitled to coverage, the Plaintiff must establish that she is entitled to damages above and beyond the policy limits received from the tortfeasor. If she is successful, she is entitled to recover only the damages in excess of the tortfeasor’s insurance policy.
Whether or not the policy holder ever makes a claim for UM/UIM coverage is almost entirely dependent on the availability and limits of the third-party tortfeasor’s insurance coverage.