Kentucky Governor Signed New Law Protecting Consumers and Car Accident Victims From Their Insurers
Background on Underinsured Motorist Coverage
Underinsured motorist (UIM) coverage as codified in KRS 304.39-320 is a crucial component of auto insurance that safeguards car accident victims and truck accident victims when they find themselves in an unfortunate situation whereby the at-fault driver’s liability insurance is insufficient to cover the full extent of their damages.
Here’s how it works: When you’re involved in a car accident or truck accident caused by another driver, their liability insurance is typically responsible for compensating you for your injuries and property damage. However, there are cases where the at-fault driver’s bodily insurance limits are inadequate to cover the victim’s losses. This is where underinsured motorist coverage steps in.
If you have underinsured motorist coverage, your own insurance company will pay the difference between the at-fault driver’s liability coverage and the actual cost of your damages up to the limits specified in your policy. Your UIM coverage acts as a safety net, ensuring you don’t bear the financial burden when the other driver’s insurance falls short. You, as the consumer, are paying for this safety net with your monthly premiums.
The Problem
The statute mentioned above was poorly written when it came to a section on credits or offsets due to insurance companies. Although a reasonable person understood what the language meant, big insurance companies and their defense lawyers grabbed onto the vagary to muddy the waters and cheat consumers out of a portion of the benefits that they paid for in premiums.
For years, some insurance companies and defense attorneys have taken the position in the scenario where there are multiple claimants (injured parties) but inadequate liability insurance for the at-fault driver, resulting in each plaintiff (injured party) receiving less than the per person limit, even though the injured party was unable to collect the per person limit for their individual claim, their underinsured motorist carrier was entitled to a credit for the full per person limit when determining if the injured party has a UIM claim and, if so, the value of the claim.
For example, the tortfeasor (the person responsible for the accident) had liability limits of $50,000 per person. However, you received only $10,000 because there were multiple claimants who also received similar amounts. In this situation, your underinsured motorist (UIM) carrier might take the position that they receive a $50,000 credit before owing any money to you for the UIM claim.
The Fix
The fine people at the Kentucky Justice Association have been fighting for consumers and injury victims over the last year to put an end to this underhanded practice. In the most recent legislative session, an amendment was passed in Senate Bill 29 (SB29) to eliminate this practice by the Kentucky legislature on March 27, 2024. The bill was sent to the governor on that same day. Governor Andy Beshear signed the bill into law on April 2, 2024. The new law is effective immediately. (View specific language of SB29).
The amendment now clarifies what all reasonable people already believed. In UIM claims, the underinsured motorist carrier only gets credit for what was actually paid to the injured party. Consumers can now rely on getting the benefits they paid for.
Questions About Underinsured Motorist (UIM) Coverage?
Call Stein Whatley Astorino, PLLC, at 502.553.4750 if you were injured in a car accident or truck accident and have questions about underinsured motorist coverage. One of their car accident lawyers or truck accident lawyers is happy to discuss your situation. The initial consultation is free.
