April 07, 2006
What is Uninsured or Underinsured coverage?
This is coverage that protects you if you are injured in a vehicle accident and the person at fault does not have insurance or enough insurance to cover you. Because Alabama requires very low liability limits, you should obtain as much uninsured/underinsured coverage as you can afford to protect yourself. For example if the at fault person only has $20,000 in liability coverage and you have $100,000 in medical bills and you are out of work for a year from your injuries, you can only recover from the at fault party’s insurance comapny $20,000.
In Alabama every automobile liability policy must have uninsured motorist coverage unless the insured specifically rejects the same. Alabama Code § 32-7-23(a) requires that:
“No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in Subsection (c)of Section 32-7-6, under provisions approved by the Commissioner of Insurance for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, that the named insured shall have the right to reject such coverage; and provided further, that unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with the policy previously issued to him by the same insurer.”
Under this code provision every automobile liability policy must have uninsured motorist coverage unless the named insured rejects the coverage in writing. If the same policy is renewed from year to year the rejection remains in force unless the named insured requests such coverage in writing. Each named insured listed on the policy also must reject the coverage. One named insured may not act for all absent legal authority to so act.
If a policy is transferred from one insurance company to another the fact that the insured specifically rejected uninsured motorist coverage on the first policy does not mean that he again is rejecting it for the second policy. See Key v. Robert M. Duke Insurance Agency, 340 So. 2d 781 (Ala. 1976). There must be a second rejection.
The minimum limits required, according to the above code provision are the minimum limits set out in the statute for bodily injury or death (Alabama Code § 32-7-6). This means that there must be at least $20,000.00 per person, $40,000.00 per accident in uninsured motorist coverage.
Presently the law states that underinsured motorist benefits are included within the statute’s provision of uninsured motorists benefits. Alabama Code § 32-7-23(b)(4) now requires that “the term “uninsured motorist vehicle” shall include, but is not limited to, motor vehicles with respect to which: (4) The sum of the limits of liability under all bodily injury liability bonds and insurance policies available to an injured person after an accident is less than the damages which the injured person is legally entitled to recover.”
In the event that there is an excess policy or umbrella policy, the Act does not require there to be uninsured motorist coverage. See, Sweatt v. Great American Insurance Company, 574 So. 2d 732 (Ala. 1990).