One of the consequences of being involved in the representation of car and truck accident victims in Maryland and the District of Columbia for 33 years is that I have seen thousands of auto insurance policies. While there is some variance from insurance company to company and jurisdiction to jurisdiction, for the most part there are common elements to all policies issued in Maryland and the District of Columbia.
However, what is routine to an experienced Maryland trial lawyer is not so for the bulk of victims of car and truck crashes. Thus, Clark and Steinhorn undertake today a brief discourse on what the mystifying insurance policy documents mean.
Our focus today is on the "declarations page" of your run of the mill auto insurance policy in Maryland. The "declarations page' spells out what drivers are covered (the named insured), what vehicles are covered and most importantly of all, what the "coverages" are.
The declaration page also reflects the costs of each component of the insurance policy for each vehicle.
On a typical Maryland policy six separate types of coverage are spelled out.
The first coverage is Bodily Injury Liability. That coverage is for car and truck accidents where the driver of your vehicle was negligent and caused personal injury to another person. The coverage is listed in amounts for "each person" and "each occurrence."
Thus, in a policy that reflects $50,000.00/$100,000.00 for bodily injury, it means that you as a negligent driver are protected against a car accident victim's claim up to $50,000.00 in value and if your negligence injures multiple people, up to $100,000.00 in total claims.
As an example Laurel, Maryland resident, Arthur Jones, skids on wet pavement and strikes a vehicle stopped at a stop sign. The stopped vehicle contains a family of five injuring them all. So what protections does Arthur's insurance policy provide him?
The answer is that the maximum any of the five injured people can claim on Arthur's policy is $50,000.00 and the total of all five claims cannot exceed $100,000.00. So Arthur is okay if none of the individual claims exceeds $50,000.00 and all the five claims total $100,000.00 or less.
He runs into problems if any individual claim exceeds $50,000.00 even if all five cases total less than $100,000.00. So as an example, Arthur has big problems if one case is worth $80,000.00 and the others are only worth $3,000.00 each despite the fact that adding up all the claims totals $92,000.00.
Arthur is exposed to the risk personally of the difference between his "each person" bodily injury coverage and the value of an individual case, in this instance meaning $80,000.00 minus $50,000.00 = $30,000.00 out of Arthur's pockets.
Thus, the amount of coverage one maintains per individual claim is important. Had Arthur paid slightly more to have bodily injury coverage of $100,000.00 per "each person" and $100,000.00 per "each occurrence" he would have little to worry about because the $80,000.00 claim would be covered and the total of the five claims is $92,000.00 which is less than his total coverage for "each occurrence."
Manifestly the more coverage one maintains the more protection one receives. A $300,000.00 policy costs somewhat more than a $100,000.00 policy but provides much greater protection. To be clear a $300,000.00 policy doesn'y cost three times as much as a $100,000.00 policy and provides much greater peace of mind to drivers and owners alike.
One more reflection on "bodily injury" coverage is important. Continuing Arthur's previous example with the $80,000.00 claim and Arthur's $50,000.00 "each person" limit, what happens if the case against Arthur goes to trial and the $80,000.00 verdict rolls in? Well, Arthur is personally responsible for the difference between his coverage and verdict or $30,000.00.
The injured party may attempt to collect the $30,000.00 from Arthur but sometimes another factor comes into play. That factor is so-called "uninsured or underinsured" motorist coverage. Very simply, the injured party can turn to their own insurance policy if their "uninsured motorist" coverage is greater than Arthur's "each person" bodily injury liability coverage.
In the present example, if the victim of Arthur's negligent driving maintained Uninsured motorist coverage of $100,000.00 per person, they could collect the $30,000.00 of their verdict that isn't covered by Arthur's policy from their own insurance coverage.
So Arthur should be happy because his car crash victim had better insurance right? Not necessarily. If Arthur's insurance company pays toward the verdict they can seek recompense from Arthur. The lesson is that having sufficient insurance coverage is important not only to car crash victims but also to the negligent drivers who injure them.
Tomorrow Chapter Two: Maryland Property Damage Coverage.