Welcome to The Legal Truth, the podcast created to provide you general legal information about South Carolina law, lawyers and the legal process, and hopefully prevent you from being surprised by the unexpected. We will answer many of the questions I've been asked during the past 35 years about South Carolina personal injury claims and workers' compensation claims. We will also discuss existing laws and proposed changes in the law and how they affect you. My name is Dirk Derrick, the founder of the Derrick Law Firm, and I'm your host.
Please see required ethics disclaimers in show notes.
Welcome to the Legal Truth Podcast. I'm Dirk Derrick. I'm here with co-host Pearl Carey. Welcome, Pearl.
Thank you so much. So excited to be here again.
Glad to have you. Today we're talking about the truth about being injured by an underinsured driver. We're going to answer questions about what happens when someone causes damages to you or your family and they don't have enough insurance to cover your damages. People are not real familiar with this type of coverage and the process surrounding this. So I've received a lot of questions about this in 35 years and we don't explain it so everybody understands it. I appreciate you co-hosting this podcast and we'll get to answering the questions.
Perfect. So first things first. What is the difference between underinsured and an uninsured motorist?
There's actually three types of at-fault drivers that cause wrecks that hurt people. They're either insured, I got plenty of coverage, and then they have enough coverage to cover all the damages they have caused. The second group are underinsured motorist coverage, and those are people with insurance coverage where they don't have enough coverage to cover all the damages they've caused. The third group are a group of drivers who have no insurance. They are uninsured motorist drivers, uninsured. So you got underinsured, uninsured and fully insured.
Right. Makes sense. So if I'm injured by an underinsured motorist, what's the first step that I need to be taking in order to seek out compensation?
Well, underinsured, we first determine all the coverages that are available. I think of coverages like a totem pole and under South Carolina law, the law tells you, in addition to policy language, what policy applies first, second, third, fourth, and fifth. So in a typical wreck, insurance on the vehicle that caused the wreck is primary liability insurance. If there's not enough of that coverage to pay for all the damages, you see if there's any excess liability, excess can come from the driver of that vehicle being a non-owner who has another policy at home or the driver of that vehicle may have been working for somebody at the time. So we're going to investigate that to see if there's excess liability coverage.
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If there's still not enough insurance to pay the damages, then you go to underinsured motorist coverage on your client's own vehicle. The majority of the people we represent, when you start having this discussion, they say, "Whoa, why is my insurance company... I don't want my insurance to pay for damages caused by another person." And that's a legitimate argument, but that's a coverage that you have on your insurance policy that you've paid for. The purpose of the coverage is to pay your damages when the at-fault driver doesn't have enough coverage.
And is that required as well, the underinsured?
It is not required in South Carolina, it's not a mandatory insurance. It's very, very important and it's relatively cheap. The state did mandate that insurance companies offer it to their insurers, to make a meaningful offer, show the public how much it would cost to buy this coverage and explain to them what this coverage provides coverage for. So they've got to explain, if you're buying a new policy in South Carolina after moving here from the Ohio State and you buy South Carolina policy, there'll be questions about, do you want underinsured motorist coverage? Here's what underinsured covers, and here goes the particular amounts you can buy it in and how much it would cost you. The only way you don't have underinsured motorist coverage is if they make a meaningful offer and then you sign your name saying you reject it. If you reject it, you don't have the coverage.
You have to make a clear choice to not have it?
That's right.
Okay.
When we look and see if people have underinsured coverage, if you have purchased it, there's no question about it, it'll be on your declaration page. There are some times when it's not on the page and our clients say, "Well, I didn't reject the underinsured motorist." So we'll contact the insurance company and say, "Send us the rejection form." If they can provide the rejection form and it was properly made, properly rejected, then there's no coverage. If they can't provide it, they have to change their policy to include it to your liability coverage amount.
So what can happen if you don't have underinsured motorist coverage?
Well, in South Carolina, the minimum limits that someone can buy in liability coverage is 25,000 per person, 50,000 per wreck coverage, which means a lot of people are riding on the road and if they calls you damage, the only insurance they got is enough insurance to pay any one person that they damage up to 25,000. But everyone who was damaged in the wreck can only collect up to 50,000. So if you got four people in the car and somebody hits you with 25, 50, those four people are trying to divide up $50,000 with no one person getting more than 25. You can eat up $25,000-
Pretty quickly, very quickly. Yeah.
If you get picked up by a helicopter, it's gone. You go to an ER and any kind of trauma treatment, it's gone. So we have a very low minimal limits that people can buy. The cost of medical care has gone up and it is not enough to cover people, they need underinsured motorist coverage. When I represent somebody, after I look at their policy, I'll say, "If you don't have it, go get it. Even if you didn't have it this time, go buy it. It's cheap and it's very, very important."
And you're saying you can save these people a lot of stress. If there's five people in a car and then they're splitting up that money, that can cause a whole other issue?
Oh, absolutely. It's just, you've got to have money to pay for the damages or you got a piece of paper that says you have a judgment, and we file on underinsured motor coverage a lot because there's a lot of people riding around on the 25/50 minimum limits.
Absolutely. And so what if the underinsured drivers assets are substantial? So how can I maybe go after those assets to get compensated for my injuries?
That's possible. It doesn't happen often.
Okay, why not?
Well, there's some laws in South Carolina as far as assets that you can't touch from at-fault drivers, that's first. So there's a huge part of the population that do not have enough assets where you could go get anything.
Okay.
Secondly, if they have liability insurance to insurance company will not pay you unless you will sign what we call a covenant not to execute or a covenant not to go after the person's asset. If the value of the case exceeds the coverage, then the client has to make a decision, do I want the insurance coverage and then go after my UIM, or Underinsured Motorist coverage, or do I want to go after assets? We will run an asset check on them, let them know, but the great majority of the time, there's not going to be assets there.
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I think in the 35 years I've practiced maybe five times, six times assets have been involved. It's an unusual situation. A lot of people don't feel like going after people's assets, and so that doesn't happen often. But if the liability pays, we would give them a covenant not to execute, which says, "You pay us the money, but we reserve the right to go after any other coverages." And if we have to file a lawsuit to get that money, we reserve the right to sue the at-fault driver to get a judgment to collect any other insurance there is, but we agree that we'll just collect from the insurance and third parties, we won't take any assets from the at-fault driver's assets.
So what you're saying is if you did choose to sue, that would kind of mean that you were open to going after someone's assets then, correct?
Not necessarily. In South Carolina, juries never know about insurance companies on wreck cases and this kind of stuff. So you have to sue the at-fault driver in order to get the judgment in making insurance companies pay you their coverages. If you can't settle the case, so you may settle the liability case and they may say, "Here goes all our money." They give it to you and you still got this stack of UIM money, and let's say that you negotiate with the underinsured motorist coverage and they won't pay you what you think is fair, you have to file a lawsuit in order to make them pay you. If you can't work out an agreement, you have to file a lawsuit against the at-fault driver and get a judgment. You get a judgment, and then your insurance company and your UIM coverage has to pay up to the policy limits on that judgment.
In past episodes, I know we kind of briefly discussed South Carolina's comparative negligence system. So how would that maybe impact a claim of this nature?
Well, comparative negligence always applies. It applies to the division of responsibility between everyone who's involved in the room. So comparative negligence can reduce the amount you recover if the plaintiff was negligent and contributed to the damages being sustained. When we talk about underinsured motorist coverage and uninsured motorist coverage and liability coverage and assets, we're not talking so much about the liability or the damages, we're talking about the ability to collect, what judgments you get or what the damages are. So comparative negligence is the liability leg. It is determining who contributed. It affects how much damages you can receive, what portion of the total damages you receive, and then these coverages determine how do you get paid those damages and is there money available to pay the damages that have been incurred because of the negligence of the at-fault driver?
Absolutely. And so just kind of reiterate, is it mandatory for insurance providers in South Carolina to offer the UIM coverage?
Yes. They've got to offer, they have to make a "meaningful offer of coverage". If they make it, you reject it, you don't have it.
The insurance company does have to prove that you did indeed reject it, correct?
They've got to give you a rejection form.
Got it. And so what are the minimum UIM coverage limits in South Carolina
25/50, just like the minimum liability coverage. What I recommend people to greatly increase the liability, underinsured, uninsured, all of that so they have plenty of coverage. One of the good things about underinsured motorist coverage is it's cheap. The second good thing is it's very, very needed because it's very easy to use up the minimum limits of liability coverage on the vehicle. The third thing is stackable, which means if I'm in my car, someone hits me, causes damage to me and my family and they don't have enough insurance, I can stack the underinsured motorist coverage on my car with the underinsured motorist coverage on my wife's car, on the underinsured motorist coverage in my son's car who lives in our household and now instead of having just the coverage on the car I'm in, I can stack all three coverages to increase the collectability I have on this claim. It is stackable. That's a benefit to having UIM coverage.
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When I say UIM, that's underinsured motorist coverage. If you look on your dec page in South Carolina, it will be listed UIM, uninsured is listed UM.
Oh, okay.
And liabilities is usually a L.
Got it. Love the abbreviation.
Yeah.
So what should someone do immediately after maybe an instance with someone that's underinsured? What should they do to best position themselves For a UIM claim?
You can't sign any releases to the liability, money is the biggest thing. I've seen this happen a couple of times in my career where the liability coverage will settle with them and they will sign a release. If they sign a release releasing the at-fault driver because he paid his coverage, they have waived their UIM claim because like I said, the only leverage we have to get that UIM if we can't get them to pay it voluntarily is to sue the at-fault driver and get a verdict. Well, if you've released the at-fault driver.
There's not an option.
You have no option. That's why we sign what's called a covenant, not to execute. We reserve the right to file suit against them, but we will say [inaudible 00:12:56] collect from the insurance coverage, not your asset.
So who could send me that release?
Well, what happens is you have a claim, let's say it's in our office, we're investigating what happened, we're investigating damages. If at certain point the damages exceed the liability coverage, we'd go ahead and make a demand for the liability money so that we could put some money in our client's pocket as quickly as possible. We would send them a covenant not to execute, wouldn't sign a release. We'd continue to let the damages build up until the client is either released and we know all the damages, we know all the facts about his damages, or until the case has a value that exceeds all the underinsured motorist coverage. There's a chance that before our client gets well, the case already has a value that exceeds all the coverage, so we'll go ahead and make a demand for the underinsured motorist coverage.
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So very often, in fact, I was looking at some data the other day, every case averages two settlements. In our office, if we close 500 cases this year, we'll have a thousand settlements because we'll settle the liability portion of it, then we'll settle the UIM later. It's not unusual to piecemeal the settlements until we use up enough coverage to pay for all the damages.
Gotcha. So sometimes it comes in two parts, those settlements?
That's right.
Are there other ways that these kind of disputes can be settled? Do they typically go to trial?
No, typically, you do not go to trial. People are worried about, am I going to court? Most of these cases don't go to trial. If the case is worked up, it really makes it hard to go to trial. What we do is we have systems in place where we can investigate a case. We start within 24 hours to preserve all the evidence. We have a team member whose job it is to find all the insurance coverages and to investigate the assets of the at-fault driver. And we have a team to start working on keeping up with our client, who they're going to see as far as doctors and hospitals and get all the bills and records and all that stuff. We are trying to gather every fact that involves this case and there's a bunch of facts. People think, two times your medical bills, so three times you target value, absolutely wrong. There's all kinds of facts. There's facts about the driver. There's facts about the defendant, facts about the plaintiff-
Coverage, all that.
... prior medical records, every medical record that has happened since the wreck has facts in it. So there's all kind of facts and we're gathering all those facts. And then at a certain point in time, we will actually focus group the case to see what 12 people think about it so we can give our client the best information to be informed as to whether or not they'd want to file a lawsuit. And to also inform the other side, "Here's what 12 people think the value of this case is in Horry County, or in Charleston County." If we get all the facts, we present all the facts, we get it appraised the chances that's going to settle for the real value, not just the money that insurance company wants to pay, it goes up drastically.
With those focus groups.
Yep. Determining how people think about certain facts, issues and damages have been huge for our clients to speed up the process and prevent the necessity of going to court.
Right and they can kind of give them a reasonable outcome or an expected reasonable outcome.
Yeah, I mean, for the first 30 years I've practiced, you'd build up a case and you get to a point where you're start negotiating the case and your client would say, "What's the value of my claim?" Everybody wants to know the value of their claim. And the truth is, I have found in the last four years since I started doing these focus groups, lawyers don't know. We know what insurance companies will voluntarily pay if you don't leverage it with a focus group, but we don't know what 12 people who don't know these people who just learned about the case in one day or two days or three days, how they value the case.
So what you're saying is if you maybe give that number that the jury has kind of come up with to an insurance company, they might be more likely to settle with your client's expected amount.
We share it with the insurance company quite often. If you get all the facts present, the plaintiff's best case, present the defense's best case, and get 12 people who don't know anyone involved in the case and they tell you what they think, that is so much stronger than guessing what 12 people would do.
Right, because you might never know.
No. A lot of times we do a focus group before litigation, we do one before mediation, after we've done discovery and got depositions taken, and then we'll do a third one before trial. If we go to trial and you've run it by six groups of six jurors, you really have a good feeling about how people think about the facts of this case. And if you share that with everybody involved, the chances of having to go to court and give the real value goes down. The interesting thing about how all that plays with underinsured motorist coverage is that a lot of times the majority of times when we are pushing through litigation, we are having a dispute with the underinsured motorist coverage instead of the liability coverage. What people don't understand is the liability coverage pays their money. They pay the money, you give them a covenant, and then you're going after the underinsured motorist coverage. Well, your insurance company then has a right to step into the shoes of the at-fault party and defend the case.
Which is crazy, we discussed that in our last episode.
Yeah. So your insurance company now hires a lawyer. They pay that lawyer to go hold down what they have to pay you. So if you end up in a courtroom, it is you and our lawyers versus a lawyer hired by your insurance company to keep their money. The jury never knows that. The jury assumes that's the at-fault driver's-
Lawyer [inaudible 00:18:40].
... attorney. But it's your insurance company's attorney.
Right.
But they never know that the liability is paid. They never know anything about insurance. Our clients are usually shocked to know, it angers them. I say, "Well, don't be angry about it." It's unusual, but understand these insurance companies have a duty to their shareholders to make you earn the money, make you work for it. That's why we do the focus groups to give them information so they can make a decision to pay you earlier.
So what you're kind of saying is the first settlement might be relatively easy, but that UIM might be more difficult to come by.
Well, if you have a big claim and the case clearly has more value than the liability, my liability companies will go ahead and pay their money. If you have then a million dollars worth of UIM coverage with four policies, you're stacking $250,000 for a total of a million, you can understand that it's going to take more evidence.
More time,
More evidence, more time building the case up, show that insurance company that the case is now worth all that money. And so they're kind of the second phase so it makes sense that you may finish with a liability quicker.
Okay. And just to clarify, I think that we've talked about this before, but after that first settlement occurs and there may be a chance that you guys can kind of start looking into the UIM coverage, does the client kind of have the right to say, "That's okay, I'm just going to stick with the liability. That's it. I don't want this process to go on any further." Or how does that work?
We actually asked the clients early on if they want us to open a UIM claim. I can totally understand it, that a client says, "Wait a minute, why is my insurance company having to pay for somebody else's negligence?" And then you explain, "This is coverage you've purchased. The purpose of this coverage is to pay in this situation." And we've had some people say, "I'm not filing it." And I say, "Well, you ought to quit paying for it. If you're not going to use it when something like this happens, why pay for it-
There's no point in having it.
... because you're throwing money in the air." It's funny, some people get concerned about their insurance premium may go up $200 every six months for the next two years, and they got $50,000 worth of underinsured motorist coverage. I say, "You'd rather have $50,000?"
Than the $200.
That's right. So it is coverage that people have different beliefs about it. If they don't want to file it, we don't file it.
Absolutely.
But if they're not going to file it, they shouldn't buy it. I mean, you shouldn't pay for it. That's kind of crazy.
Right. Well, thank you so much for your time. Do you have any last comments that you'd like to make about underinsured motorists?
Buy it. Buy a lot of it. You need it. If something happens where you have the coverage, I strongly encourage you to use it. It will help. The two additional benefits of underinsured motorist coverage similar to uninsured, is that it is stackable. So if you've got 250 on this car, you got four cars, you got a million in coverage, as long as you get wrecked, as long as you were injured in one of those vehicles. And it's also not subject to subrogation from most insurance policies, which means your health insurance pays for your bills. If we're dealing with liability money, they can subrogate and get their money paid back out of the liability money. When you're dealing with underinsured motorist coverage, they can't subrogate against it. They have no right to get any of that when you file it.
That's it.
So you can keep more of your underinsured money than you can liability in a lot of situations. There's only a few exceptions to that. On underinsured motorist coverage, if it's in [inaudible 00:22:08] of federal insurance policy, they can sometimes get some of that money out. They've paid some claims depending on what their language says, and Medicare can get repaid out of underinsured also. It's good coverage and if anyone has any questions about it, they can call here and we can talk about it.
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I have a little booklet on the Derrick Law Firm website called Three Feet from Disaster where I explain coverages and what coverages you need to protect your family. It's something you don't think about until it's too late. And it's sad conversations I have with people when there's not enough coverage to pay the damages and somebody's lost a job or lost the ability to earn a living and if had the coverage, we could collect a lot more for them. I mean, it can be the exact same facts, exact same damages and one of our clients getting $2 million and one of our clients getting $25,000-
Big difference
... because they don't have underinsured motorist coverage. I know about, it's probably 15 years ago now, maybe even longer than that, it's probably when I wrote the little booklet for the website, I said, Man, I need to check with my family to make sure they're covered." And I called my mother and I said, "Mama, send me a picture of your dec page or drop it off my office." We didn't have cell phones then, I don't think, but, "Let me see how much coverage you've got, or pull your coverage up and let me know." Well, she looked it up, she called me back. She didn't have enough coverage. I said, "I want you to go to your agent tomorrow and I want you to see what it would cost you to increase your coverage up to 500,000 in liability, 500,000 in UIM, underinsured motorist coverage, 500,000 in uninsured motorist, and see if that's something you can pay so you have plenty of coverage."
Just in case, yeah,
Just in case. Well, she called me back in a couple of days and says, "Dirk, I did what you told me and it was so cheap." She said, "I went ahead and got a million dollars." She was all excited about having a million dollars worth of coverage on her car. If my mama can afford it, people need to talk to their insurance agents about getting enough coverage to cover their family.
Right, absolutely. It could be worth it.
Pearl, thank you for helping co-hosting this podcast.
Absolutely.
If anyone has any questions, they can call us and talk to us about coverage. I don't mind talking coverage to people. I really hate to see people in situations where if they had the right coverage, they could get along with their life much better.
Absolutely, agreed. Well, thank you to all of our listeners and we'll be here next week.
Thank you for joining us on The Legal Truth Podcast. If you have questions that you would like answered on a future episode, please send them to [email protected]. If you would like to speak to us directly, call us at 843-248-7486. If you find the podcast valuable, please leave us a five star review and share The Legal Truth with your neighbor, friend, or family member who is seeking reliable information about a South Carolina personal injury or workers' compensation claim. Dirk J Derrick of The Derrick Law Firm Injury Lawyers is responsible for the production of this podcast located at 901 North Main Street, Conway, South Carolina.
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Derrick Law Firm Injury Lawyers has included the information on this podcast as a service to the general public, use of this podcast and any related materials does not in any manner constitute an attorney-client relationship between Derrick Law Firm Injury Lawyers and the user. While the information on this podcast is about legal issues, it is not intended as legal advice and should not be used as a substitute for competent legal advice from a licensed professional attorney in your particular state. Anyone seeking specific legal advice or assistance should retain an attorney. Any prior results mentioned, do not guarantee a similar outcome. The content reflects the personal views and opinions of the participants in the podcast and are not intended as endorsements of any views or products. This podcast could contain inaccuracies. The information contained in this podcast does not constitute legal advice and is not guaranteed to be correct, complete, or up to date as laws continue to change.
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In this podcast, you'll hear information about focus groups. Please note that not all of the firm's cases are presented to a focus group. Additionally, when speaking about juries or jurors in relation to a focus group, we are speaking of focus group participants and not actual trial juries or jurors.