"I Have Full Coverage." Do You Now?

Written by: Ken Harrell

For any lawyer who helps people who have been injured in a car accident, one of the first orders of business is finding out how much insurance coverage is available for the client’s claim. The first step is determining how much liability insurance coverage the at-fault driver had on his vehicle. In years past, the lawyer for an injured South Carolinian could only obtain this information if the insurance company for the at-fault driver voluntarily agreed to divulge it, or in response to discovery requests if a lawsuit was filed. Fortunately, South Carolina law was revised in 2012 and per section 38-77-250, an insurance company is now required to divulge its liability insurance coverage amount within 30 days of receiving a written request “…from the claimant’s attorney.” (If you’ve suffered a serious injury, this is one of many reasons why you should hire an experienced lawyer as soon as you can so this information can be obtained quickly.) The 2012 amendment to South Carolina’s insurance coverage laws does allow insurance companies not to disclose the amount of fleet policy limits (i.e., coverage for commercial vehicles), umbrella coverages, or excess coverages. (The amount of insurance coverage required for commercial vehicles can vary depending on the size and make of the insured vehicle but tractor-trailer rigs must have $1 million of coverage in South Carolina and the lowest amount of coverage allowed for smaller commercial vehicles is $300,000.00). The insurance coverage problem we most often face at Joye Law Firm doesn’t arise when commercial vehicles are involved but instead occurs when the at-fault driver was a private individual. In South Carolina, the minimum amount of liability insurance coverage a driver must carry is $25,000 per person and $50,000 for all injured parties in an accident. (In other words, if four people were injured by an at-fault driver, the most that any one person could recover under a South Carolina minimum limits policy would be $25,000 and the most that all four persons combined could recover under the policy would be $50,000).

I love South Carolina but if you live here (and you ever leave the friendly confines of Charleston, Columbia, Myrtle Beach or Greenville), you quickly realize that we live in a poor state. What that means is that a large percentage of our residents carry minimum limits insurance coverage (and the large number who are uninsured will be the topic for another blog). If someone has been seriously injured, $25,000 won’t go very far. For example, let’s say that the injured person in a car wreck sustained a shoulder injury that is going to require surgery for a torn rotator cuff. The average cost of a rotator cuff surgery in South Carolina alone exceeds $25,000, and that wouldn’t even take into consideration the injured person’s other medical costs, their lost wages, pain and suffering – the list goes on and on. So what to do when your damages clearly exceed the amount of liability insurance coverage? It’s true that you can consider going after the at-fault driver’s personal assets but this is not easily done. Also, guess what? Most people who have minimal limits insurance coverage don’t have two extra nickels to rub together – that’s why they bought the cheapest insurance possible! Obtaining an excess judgment against most of these folks would be an exercise in futility.

Instead, what we most often do is explore our own client’s insurance coverage situation to see if she has additional coverages which will help us close the gap between the value of her case and deficient coverage for the at-fault driver. When we meet with our clients for the first time, one of the questions we ask them is for a detailed accounting of their personal insurance coverage. I wish I had a dollar for every time a client has told me, “I’m good – I have full coverage.” (Don’t get me wrong, I’m not making fun of my clients. If a mechanic asked me about an engine issue, I’d probably tell him I knew how to open the hood.) Unfortunately, what most South Carolinians think of as “full coverage” isn’t full coverage at all. Instead, it just means that they have purchased the mandatorily-required amount of coverage ($25,000/$50,000 – see above) to be street legal. The only mandatory coverage which is provided as part of the purchase of liability insurance coverage is uninsured motorist coverage, which kicks in when you are injured by an uninsured at-fault driver. Again, I’ll talk more about uninsured coverage issues in a separate blog.

The most important type of supplemental insurance coverage is under-insured motorist (UIM) coverage. If I could reach through this computer screen and get everyone reading this article to do one thing, it would be this – call your insurance agent and ask, “do I have under-insured motorist coverage?” Compared to the cost of liability insurance coverage, UIM coverage is relatively dirt cheap. If you don’t believe there’s any such thing as dirt cheap insurance coverage, please test me and ask your agent for a quote. South Carolinians are allowed to purchased UIM coverage on each of their household vehicles up to the amount of liability coverage in place on that vehicle. In other words, if you only have $25,000/$50,000 in coverage for your car, you can’t buy $50,000/$100,000 of UIM coverage to protect your family and you. However, as long as one of your household vehicles was involved in the wreck where you were injured, you are allowed to stack all of your household vehicles’ UIM coverages to supplement the limited recovery of liability coverage.

Let me give you a hypothetical example to show you how this works. Let’s go back to our car accident victim who has to undergo a surgery to repair a torn rotator cuff. The at-fault driver only had $25,000 of coverage, which is paid by the insurance company. (BEWARE – there are strict requirements regarding how this limited liability coverage should be paid and what documents should be signed to protect your ability to get a supplemental UIM recovery. Just as I wouldn’t try to repair my car’s engine, don’t try to do this on your own.) However, the injured person had $50,000/$100,000 of coverage on each of the four vehicles in her household. This means that she could recover up to another $200,000 ($50,000 times four) in UIM benefits. Now understand that just because you have UIM coverage doesn’t mean that your company will automatically stroke you a check. If anything, recovering UIM coverage can be harder than getting a full tender of the liability coverage because there aren’t as many bad faith pressure points for the UIM carrier. However, from this example, you get a good idea of how important it can be to have UIM coverage in place if you have a significant injury.

Obviously, my hope is that you never find yourself in a situation where you’re injured badly enough in a car accident that your UIM coverage kicks in. However, given the large number of knuckleheads on our highways, it’s sadly true that the odds are high that a family member or you will need to access this coverage in your lifetime. To make sure that your loved ones and you are protected, take the time to make sure you have under-insured motorist coverage in place to protect yourself.