A Tale of Two States | The Perkins Decision | Take Home Message

An Attempt at Making Uninsured Motorist Coverage More Pro-Consumer Fails in the Appellate Courts

A Tale of Two States

In Washington, when someone buys insurance to protect themselves from the negligence of an uninsured motorist (UM) or an underinsured motorist (UIM), they get the coverage they pay for. If a Washington citizen buys, say, $100,000 of UM/UIM coverage, they get up to an additional $100,000 of insurance benefits, above and beyond whatever amount of coverage the negligent driver may have. In shorthand, this is often called "stacking" -- the UM/UIM policy "stacks" on top of the negligent driver's coverage. If, for example, the negligent driver carried $25,000 of insurance coverage, there would be a total of $125,000 of potential insurance benefits between the policies of the at-fault driver and the insured person.

To best serve your clients, make sure they have adequate uninsured and underinsured motorist coverage.

Here in Oregon, UM/UIM coverage works very differently. If an Oregon citizen buys $100,000 of UM/UIM coverage, they may or may not get some or all of that coverage, depending on the limits of insurance carried by the negligent driver. Oregon UM/UIM policies are available only to the extent those limits exceed the adverse driver's liability insurance limits; there is no "stacking." If the negligent driver carried $25,000 of insurance coverage, the Oregon $100,000 UM/UIM policy would pay up to the difference, a maximum of $75,000. If the negligent driver carried $100,000 of liability insurance, the Oregon $100,000 UM/UIM policy would pay nothing additional. (That same kind of policy in Washington would pay up to an additional $100,000, or $200,000 total, potentially twice the coverage an Oregonian would receive under the same circumstances).

The Perkins Decision

A Jackson County case taken up on appeal made a run at having Oregon UM/UIM policies interpreted more along the lines of Washington policies. Under that approach, consumers would have been able to receive up to the level of additional insurance coverage they thought they had purchased. In Mid-Century Insurance Company v. Perkins, 2008 ORSC S054652-022808, the Oregon Supreme Court rejected the plaintiff's argument, thereby keeping Oregon law less consumer-friendly on uninsured and underinsured motorist issues. As the Supreme Court explained, the threshold question of whether a motorist is "underinsured" is determined in relation to the injured person's uninsured motorist coverage policy limits. The limit of the insurer's liability (that is, the maximum the amount of UIM benefits that may be paid) under that coverage, however, is calculated by subtracting the "amount that the insured recovers from other policies" from the uninsured policy limit. 344 Or. at 217.

Take Home Message to Your Clients

Your clients need uninsured motorist coverage. According to a 2006 report by the Insurance Research Council, twelve percent of Oregon drivers are uninsured. That's about one out of every eight drivers. That number may increase due to a new law from the 2008 Special Legislative Session, Senate Bill 1080, that will prevent undocumented persons from obtaining drivers licenses. We already see a significant number of clients injured by uninsured motorists. Those clients who purchased higher UM/UIM limits are thankful they did so.

Your clients may have less underinsured motorist coverage than they think. If they are carrying Oregon's minimum limits ("split limits" of 25/50, meaning up to $25,000 per person and a maximum of $50,000 per accident), they in effect have no underinsured motorist coverage at all (because their UIM limits would match any negligent insured driver's liability limits). Coverage of $25,000, $50,000, and even $100,000 doesn't go far with today's medical costs. We regularly see clients with medical bills exceeding those amounts.

Granted that Oregon has a consumer-unfriendly UM/UIM scheme, buying additional coverage is surprisingly affordable. For example, taking UM/UIM from a modest 50/100 (maximums of $50,000 per person, $100,000 per accident) to 100/300 ($100,000 per person, $300,000 per accident), generally costs about an additional $50 a year -- and that covers not only the increased uninsured/underinsured motorist coverage, but also the corresponding increase in liability coverage. The additional cost of this critical coverage can often be offset by modifying less important coverages, such as by raising collision deductibles or changing rental car coverages

Tort Tip Archives

Teen Drivers and Parents' Liability
Get the Lead Out Test Kits
When Government Does Wrong
Nursing Home and Assisted Living Rights
Health Insurance Tort Blues
Holiday Accidents
Insurance Legislation
Premises Liability
Inadequate Liability Insurance
Measure Seeks to Limit Contingent Fees
Dealing with Clients Outside Your Scope of Practice

The Corson & Johnson Law Firm serves clients throughout Oregon, including Eugene, Portland, Brownsville, Springfield, Hood River, Brookings, Corvallis, Salem, Redmond, Roseburg, Medford, Klamath Falls, Myrtle Creek, Bend, Albany, Creswell, Ashland, Central Point, Grants Pass, Junction City, Florence, Tigard, Cottage Grove, Coos Bay, North Bend, Newport, Oregon City, Hillsboro, Gresham, Beaverton.

Benton County • Clackamas County • Coos County • Crook County • Deschutes County • Douglas County • Jackson County • Jefferson County • Josephine County • Klamath County • Lane County • Lincoln County • Linn County • Marion County • Multnomah County • Polk County • Tillamook County • Washington County

The Corson & Johnson Law Firm does not offer any guarantee of case results. Past success in litigation does not guarantee success in any new or future civil action. Our web site describes some of the cases that Don Corson, Lara Johnson, or The Corson & Johnson Law Firm has worked on in the past. Our description of those cases is summary in nature. The results obtained in each of the cases depended on the particular facts of each case. The results of other cases will differ based on the different facts involved.

FULL DISCLAIMER