Appeals Court: Indiana UIM Crash Insurance Limits Need Not Match Liability

All drivers in the State of Indiana are required to purchase some combination of auto insurance as set by state lawmakers, currently a minimum of 25/50/10 ($25,000 per person/$50,000 per crash bodily injury liability and $10,000 for property damage). That 25/50 coverage isn’t for the policy holder. It’s to cover damages caused by the insured’s negligence (because Indiana is an at-fault and not a no-fault state). And although Indiana doesn’t require drivers to buy UIM crash insurance (underinsured motorist coverage) in case an at-fault driver’s policy isn’t sufficient to cover the damages, IN Code 27-7-5-2 does mandate that auto insurers offer every policy standard with it and insured must sign a written waiver to decline. Munster car accident attorneys know the law is also clear that UIM limits are never to exceed the limit of bodily injury liability coverage.

A question recently before the Indiana Court of Appeals was whether a UIM insurer was legally barred for selling a policy with UIM coverage in amounts less than bodily injury liability coverage. Could a policy be invalidated on that basis?

The court answered no in Troy Lee v. Liberty Mutual Fire Insurance Company, disagreeing with the plaintiff truck driver who was injured in an on-the-job crash that the amounts had to be the same.more

After a 2016 Indiana truck crash left him injured, the trucker settled with the other driver, who was at fault, for her liability limit of $225,000. This was higher than the truck policy’s UIM limit ($60,000) but less than his damages and – unfairly, he argued – the $2 million liability coverage.

As our Munster car accident attorneys can explain, the terms of Indiana auto insurance policies can sometimes be successfully challenged in a personal injury case if they are illegal or the terms are clearly unfair or would be bad if applied to the public at-large. Because insurers – not customers – write the contracts, any ambiguity in interpreting a policy is to be construed in favor of the insured.

Here, the issue wasn’t ambiguity but rather an assertion the insurer violated state law that, as plaintiff argued, required insurers to only sell policies in which these two coverage amounts are the same. He cited both Indiana’s UIM coverage statute and a 2017 ruling by the U.S. Court of Appeals that supported his stance. His injury lawyer argued the plain language of state law required insurers to offer policies with equal amounts of coverage for UIM and liability.

Liberty Mutual countered with a different interpretation of the statute, arguing the federal appeals case involved an umbrella policy (not a UIM policy) and the at-fault driver here wasn’t underinsured because her policy limits were greater than $60,000.

Both the trial court and appeals court agreed with the defense. What that means now is we can expect auto insurers increasingly to sell policies with varying liability versus UIM coverage amounts – especially if they’re commercial policies. In effect, a person you injure in causing a crash will be entitled to more coverage than you, if you were hurt in a collision by an at-fault driver who doesn’t have enough to reimburse your total losses.

Indiana Injury Attorney Burton A. Padove handles personal injury claims throughout northern Indiana, including Highland, Gary and Hammond.