Enhanced Uninsured and Under-Insured Coverage in Maryland
March 1, 2018 By Mark A. Kohl
A recently-enacted statute substantially changes the law regarding under-insured motorist claims in Maryland. If a policy was sold, issued or delivered prior to July 1, 2018, an under-insured motorist carrier’s exposure was limited to the limits of its policy minus the limits of the tortfeasor’s policy (absent the operation of a worker’s compensation award or payment to the Plaintiff to maintain subrogation rights against the tortfeasor). Most often, in situations where the tortfeasor’s liability limits equaled or exceeded the limits of the Plaintiff’s own under-insured motorist (“UIM”) coverage, there simply was no UIM claim to be made.
However, due to the enactment of Section 19-509.1 of the insurance article, any policy issued or sold in Maryland after July 1, 2018 must offer “enhanced” uninsured and under-insured motorist coverage. In essence, the UIM carrier will no longer receive an offset for the limits of the tortfeasor’s liability coverage. For example, if both the tortfeasor and the Plaintiff have $30,000 liability and UIM limits, the available coverage would now be $60,000 ($30,000 from the tortfeasor’s policy and $30,000 from the UIM carrier’s policy). Where the tortfeasor’s policy is $100,000 and the Plaintiff’s $30,000, the potential coverage would now be $130,000 ($100,000 from the tortfeasor’s policy and $30,000 from the UIM carriers). Prior to the enactment of Section 19-509.1 no UIM claim would have accrued.
The import for UIM claims is substantial, as almost any claim that could exceed the limits of the tortfeasor’s liability policy will now have a UIM component.
There are, however, a few caveats. First, the insured has the right to decline enhanced coverage (similar to how an insured can decline personal injury protection benefits). Second, the statute only applies to policies sold, issued, or delivered in Maryland (if the policy was issued in another state that state’s law will govern).
Finally, and most importantly, when an insured elects (even if by default) to obtain the “enhanced” UIM coverage under Section 19-509.1, Section 19-511 of the Insurance Article by its revised terms does not apply. As revised, Section 19-511 stated that if enhanced coverage exists a tender of policy limits triggers no obligation on the part of the UIM carrier to pay to the Plaintiff the limits of the tortfeasor’s policy to maintain subrogation rights.