Stacking Georgia UM Policies

When Does Uninsured or Underinsured Motorist (UM) Insurance Matter?

The short answer is a lot more often than you might think.  You probably know if you get injured in a car wreck and the person that hit you does not have any liability insurance, your UM coverage applies.  But that example is just the beginning.  Here are a few examples of other times UM coverage could be helpful in making sure you are fully compensated for your injuries.

• Let’s say you are riding with me.  We aren’t related.  We get hit by someone with no liability insurance.  Both of us have claims valued at $100,000.00.  Where can we turn for our recovery?  First, to our own UM insurance.  Even though you are riding in my car, it’s your UM insurance coverage that pays you first.
• Assume you have no UM insurance.  In that event it is the UM of any person you are: (1) related to and (2) you lived with at the time of the wreck (UM calls these “resident relatives”), that pays you.
• Assume you have no UM and neither do any of your “resident relatives”.  In that event, my UM pays you.

A more complicated example of how UM works

Now let’s say you are riding with me, my mom and my brother.  You aren’t related to any of us.  We get hit by someone with 25/50 liability insurance limits.  (25/50 is $25,000 per person and $50,000 per accident.  The most that insurer will pay any one person is $25,000 and the most it will pay regardless of the number of people injured in the accident is $50,000.  So even if a bus full of people are injured, that insurer only has $50,000 to pay among all of them.)    You, me, my mom and my brother each have claims valued at $50,000.  The liability insurer offers each of us $12,500.  What can you do about the other $37,500 of your claim?

Bear with me now because this can get really complicated.  If you have 25/50 in “traditional” or “offset” UM – that is UM that is offset by the liability insurance you recover –  you can get $12,500 from your UM [$25,000 (your UM) – $12,500 you were offered = $12,500 your UM pays].

But your claim is worth $50,000, so where can you recover the rest?  If you look back at the example I provided above, you’d go to your resident relatives’ UM coverage and then my UM coverage.If you have 25/50 in add-on UM (that is UM that adds onto the liability insurance) you could recover $25,000 from your UM instead of $12,500.

But you are still short $12,500 of the value of your claim.  Like in the example I gave earlier, you could go to your resident relatives’ UM and then mine to try to recover the $12,500 you are short.

What if my insurance company tells me I do not have UM coverage?

Sometimes UM carriers will say you didn’t have any UM – you rejected it.  You should be extremely skeptical if an insurance company tells you this.  Georgia law does allow you to reject UM entirely, but the insurance company must have it in writing that you rejected UM coverage.  If they can’t produce proof in writing that you rejected UM coverage, then you have UM coverage.

Sometimes insurance companies try to tell you that you have traditional/offset UM instead of add-on UM.  Let’s say you have a claim worth $50,000 and get hit by a person with $25,000 in liability coverage.  You have $25,000 in UM.  Your UM carrier tells you that your UM is traditional/offset so you aren’t entitled to anything from them.

If you just take their word for it you may cost yourself $25,000.  Georgia law does allow you to choose traditional/offset UM, but the insurance company must prove you chose traditional/offset instead of add-on.  If they can’t produce proof, you have add-on UM coverage.  So what difference does add-on coverage make in the example in this paragraph?  With add-on UM, your UM insurance carrier would have to pay you the other $25,000 of your claim.

One other thing Georgia law requires concerning UM coverage is that your liability coverage and UM coverage must be the same amount unless you affirmatively chose lower UM coverage.  I had a case several years ago where the client was severely injured.  There was very limited liability coverage, not nearly enough to pay my client for his losses.  My client had $500,000 in liability coverage but only $150,000 in UM.  We required the insurer to prove our client affirmatively chose lower UM limits.  The insurer could not, and our client’s UM coverage became $500,000, which meant our client was able to recover the full extent of his losses.

Stacking Uninsured/Underinsured Motorist Coverage Policies

Stacking UM coverage may sound crazy, but under Georgia law, you get to do just that.  First, it is important to understand that what I discuss in this blog only applies to traditional/offset UM insurance.  It does not apply to add-on UM.

One of the first things we do when we are hired by a new client is determine all of their possible UM coverage.  Once we have put all of those UM carriers on notice and received confirmation of the amount of the UM coverage, the next thing we do is stack it.  What does that mean?

Assume you are riding with me.  We aren’t related.  We get hit by someone who has 25/50 liability coverage.  You live with your spouse; your grown child; and your mother-in-law.  You and your spouse have two cars, both insured with insurance company “One”.  Your grown child owns a car, and it’s insured with insurance company “Two”.  Your mother-in-law owns two cars insured with insurance company “Three”.  Insurance companies “One” and “Three” write separate policies on each car.  So you and your spouse have two policies with insurance company “One”, and your mother-in-law has two policies with insurance company “Three”.  Every policy of you and your resident relatives contains UM coverage of 25/50 traditional/offset.  Your claim is worth $125,000.

How much UM do you have and how much does it pay?  Without stacking, it would look like this chart.

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The UM coverage would equal the liability coverage so the at-fault party would not be “underinsured” and you’d have no UM claim.
This chart shows what that same traditional/offset UM coverage looks like when you stack it.

When you stack all 5 UM policies (2 for Insurance One; 1 for Insurance Two; and 2 for Insurance Three) you get $125,000 in UM.  You compare that total coverage against the $25,000 in liability coverage, and the at-fault party is “underinsured” by $100,000.00.

Who pays?  The liability carrier pays its $25,000 first (but only under a Limited Liability Release preferably drawn by your attorney – see my blog Two traps that can cause you to totally lose UM coverage you have paid for), and then applying decisions of Georgia’s appellate courts, 4 of the 5 UM policies will pay another $100,000 so you recover your full $125,000 in damages.

UM coverage is one of the most important coverages you can buy, and it’s often much less expensive than you might think.  If several traditional/offset UM policies cover you, stacking increases the chance you’ll be able to recover your losses.

What should I do if all this UM coverage confuses me?

UM coverage can be extremely complicated to understand and easy to lose if you are not careful.  I would highly recommend you have a free consultation with an attorney to make sure you get all the coverage to which you are entitled.  If you would like to set up a free consultation with me or one of the other attorneys in our firm who specializes in personal injury cases, simply call the phone number at the upper right or complete the “Need Help” form at the right of this page.