Uninsured and Underinsured Motorist Coverage

Alabama law requires that any automobile liability insurance policy issued to an Alabama resident must include uninsured and underinsured motorist coverage.[1] In essence, uninsured/underinsured motorist coverage (frequently referred to as “UIM” coverage) provides benefits to the insured when injured by another driver who either (a) does not carry any liability insurance; or (b) does not carry liability insurance coverage sufficient to cover the total damages incurred by the insured driver.  In other words, you – as the injured driver – have a claim against the at-fault driver, but because the at-fault driver does not carry any or enough liability insurance coverage to pay for your damages legally recoverable as a result of the collision, you as the injured party, may have a claim under the underinsured motorist coverage under your auto insurance policy.  Keep in mind, here, Alabama law currently mandates that every vehicle carry minimum limits of liability coverage in the amount of $25,000.  Alabama Code § 32-7-6.

So how do I determine if I have a claim for UIM benefits under my policy?

  • Check your automobile insurance coverage and first determine if you have purchased UIM coverage for the period covering the date of the collision.
  • Determine the limits of liability coverage carried by the at-fault driver on his vehicle.  This may require the assistance of an attorney since Alabama law (unlike Georgia) does not mandate that the liability carrier disclose its limits of coverage to the injured driver or his attorney.
  • Determine the amount of available UIM coverage under your policy, and any other automobile policy carried by you or other family members in your household.  Again, this determination may require the assistance of an attorney.  Alabama law limits recovery of UIM benefits, under any one contract (policy), to the primary coverage plus such additional coverage as may be provided for additional vehicles, on the same policy, but not to exceed two additional coverages, within the same contract (policy) of insurance.  Thus, under multi-vehicle policies the insured can recover up to three times the policy limits of coverage.  There is, however, no such limitation on single vehicle policies.  As such, recovery by an insured under single-vehicle policies may exceed the “three coverage” limitation. State Farm Mutual Automobile Insurance Company v. Fox, 541, So. 2d. 1070 (Ala. 1989).

What is “stacking”?

Stacking occurs, as explained above, where the injured driver either carries more than one automobile liability insurance contract having UIM coverage, or, the injured driver is an “insured” under a policy covering multiple vehicles and which provides UIM coverage.  For example, husband and wife have separate vehicles covered under separate policies, each policy carrying separate UIM coverage.  If a husband is injured in an automobile accident, he may first claim UIM coverage under the contract covering the vehicle he was driving, and then “stack” the UIM coverage coming from the separate policy covering the other household vehicle.  It does not matter whether the husband was driving his car or his spouse’s car.  Alternatively, if husband and wife carry their two vehicles on the same policy, plus a third vehicle garaged at the same household, the primary coverage can be extended but not to exceed two additional coverages within the same contract.  So, the husband may claim the primary coverage, plus additional primary coverage for each vehicle on the policy, not to exceed two additional vehicles (primary coverage x three).  As discussed above, pursuant to Alabama Code § 32-7-23(c), an insured may stack up to two additional coverages which means in the case of multi-vehicle policies, the insured can recover up to three times the policy limit.

What if I am an injured passenger?

Essentially, the rules are the same for passengers, the primary difference being additional coverages available through the passenger’s own auto policies versus the policies insuring the vehicle in which the passenger was riding.  Passengers insured under multi-vehicle policies can stack up to two additional coverages or three times the policy limit.  However, passengers under single-vehicle policies are limited to one coverage.

How much time do I have to make a claim for UIM benefits?

The six-year contract statute of limitations in Alabama applies to uninsured motorist insurance claims.  In addition, the failure of the insured to make a claim within the statute of limitations applicable to the tortfeasor (normally two years) does not bar an uninsured motorist claim.

What damages are legally recoverable by the injured driver assuming UIM coverage is available?

UIM benefits take the place of liability insurance coverage that either does not exist or exists in an amount insufficient to cover the injured driver’s damages.  The injured driver may recover his or her lost wages, medical expenses, and compensation for human pain and suffering, both before, during and after the collision, including compensation for permanent injury.  While medical expenses and lost wages or income are measurable, compensation for human pain and suffering and permanent injury are left up to a jury, generally speaking.  There is no formula, and arguably, there is no minimum or maximum amount which must be awarded.  If the sum of all these damages exceeds the liability coverage available through the at-fault driver, then the injured driver has a UIM claim for the “excess” not to exceed the available UIM coverages (see above).  So, if the injured driver has a claim worth $75,000, and the liability coverage for the at-fault driver equals $50,000, the injured driver may seek UIM benefits for the excess, or $25,000, limited to the UIM limits of coverage available under the circumstances of the case (see above discussion on UIM limits of coverage).  In addition, if the injured driver is entitled to punitive damages against the at-fault driver, the insured may recover those same punitive damages as part of the UIM claim.

So, if the liability carrier for the at-fault driver offers the limits of coverage available to the at-fault driver, should I take the money and then contact my insurance carrier for making a claim of UIM benefits?

Absolutely not.  One of the biggest “minefields” in automobile insurance law is the handling of a UIM claim where the at-fault driver’s insurance carrier tenders (or offers) its liability limits of coverage for the collision.  The Supreme Court of Alabama has set forth a general procedure to be followed which protects the rights of the at-fault driver, the injured driver, the underinsured motorist carrier and the liability carrier.  Failure to follow this legal procedure may result in the injured driver’s forfeiture of any claim for UIM benefits.

Settlement with the at-fault driver (a/ka/ tortfeasor) requires an extensive understanding of the various insurance coverages available to the injured driver, whether those coverages come from one or more policies providing coverage to the at-fault driver or one or more coverages providing UIM benefits to the injured driver.

Generally speaking, the procedure set forth by the Supreme Court of Alabama provides as follows:

  • The injured driver must give notice to his/her automobile liability insurance carrier that he intends to make a claim for UIM benefits as soon as it appears that the insured’s damages may exceed the tortfeasor’s limits of liability coverage.
  • If the tortfeasor’s liability insurance carrier and the injured driver negotiate a proposed compromise or settlement of the injured driver’s claim against the tortfeasor, and if the settlement would release the at-fault driver from all liability, then the injured driver, before agreeing to the settlement, must immediately notify the underinsured motorist carrier of the proposed settlement and the terms of any proposed release.
  • At the time the insured/injured driver informs his or her underinsured motorist carrier of his or her intent to settle the claim, the insured must also inform the carrier as to whether the insured will seek UIM benefits in addition to the proceeds of the proposed settlement, and must do so in sufficient detail so that the UIM carrier can determine whether it will refuse to consent to the settlement, will waive its rights of subrogation against the at-fault driver, or will deny any obligation to pay UIM benefits. It is this point of the process which is beyond the scope of this article and which requires assistance of legal counsel.
  • Suffice it to say, the injured driver should not settle with the at-fault driver or his/her insurance carrier without first allowing the UIM carrier a reasonable time within which to investigate the insured’s claim and to notify its insured of its proposed action.
  • Certain actions or failure to act by the UIM carrier may result in a waiver of its right to subrogate against the at-fault driver or the liability carrier itself.  Again, whether your UIM carrier has “waived” any rights is a legal question for your attorney.
  • If the UIM carrier wants to protect its subrogation rights against the at-fault driver, it must, within a reasonable time, and in any event before the at-fault driver is released by the UIM carrier’s insured, advance to its insured an amount equal to the at-fault driver’s settlement offer.

There are several reasons for seeking assistance of legal counsel before attempting to settle your claim against the at-fault driver and his/her liability insurance carrier irrespective of whether one intends to make a claim for UIM benefits.  However, legal counsel well-versed in the area of Alabama law governing UIM claims is vital to a successful UIM claim to maximize the benefits available to the injured driver.


Alabama drivers entitled to an uninsured and/or underinsured motorist claim enjoy enormous legal rights and benefits under Alabama law.  However, you, as the injured driver, must understand that while you are an “insured” under your own policy providing UIM benefits, once you notify your carrier that you intend to make a claim for those benefits, you become a “claimant” in the eyes of your UIM carrier.  It is at this point that the UIM carrier “lawyers up”, and the best advice to the injured driver is to do the same.  

Ted D. Morgan, P.C. is familiar with the issues specific to UIM coverage, the total amount of UIM benefits available, the legal minefield to present the UIM claim, and the Alabama law specific to maximizing your UIM claim through the benefits of uninsured/underinsured motorist coverage available to the injured driver.

Contact our experienced firm today!

[1] Ala. Code § 32-7-23(a) mandates UIM coverage, however, the insured has the right to reject UIM coverage.

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