Beginning July 1, 2018, Maryland auto insurers issuing new policies will be required to offer enhanced underinsured motorist (“EUIM”) coverage in place of the uninsured motorist (“UM”) coverage required under § 19-509. Md. Code Ins. § 19-501.1(d). Unlike UM coverage, EUIM coverage prohibits the carrier from reducing the coverage amount by any applicable liability insurance paid on behalf of a liable third party. Md. Code Ins. § 19-501.1(h)(2). Essentially, claimants who elect EUIM coverage will be able to stack their EUIM payment on top of anything they receive from a responsible third-party’s liability policy without any offset.
For example, suppose a driver is hit by a liable third party. The third party has a $50,000 policy limit, and the driver has underinsured motorist (“UIM”) coverage of $200,000. Under previous statutes, the driver could recover $50,000 from the third party and then up to $150,000 from his own carrier ($200,000 – $50,000) for UM benefits. Under the new EUIM statute, however, the driver could recover $50,000 from the third party as well as the full $200,000 from his own carrier for a total of $250,000 — depending, of course, on damages.
The purpose of this bill was to expand coverage and protection for drivers who are injured by uninsured or underinsured motorists. Uninsured and underinsured motorists have been a focal point in Maryland recently, leading to new laws such as this, along with an UM task force, established in 2014. (Fiscal and Policy Note for HB5). Critics of the bill have opined that it will lead to higher premiums.
EUIM coverage will not be automatic, and must be elected to in writing by the insured. Md. Code Ins. § 19-501.1(c). Additionally, carriers must offer EUIM coverage to any renewal or extension of coverage of a policy beginning October 1, 2017. Id. If the insured does not elect to obtain EUIM coverage, the insurer must still offer the previously required regular UIM coverage.
Subrogating a claim under EUIM will essentially be identical to subrogating a claim under a regular UM policy. The only difference being the statutory section underlying the process. See Md. Code Ins. §§ 19-511, 19-511.1. Under both statutes if an injured person receives a written policy-limits offer to settle a claim from an auto liability insurer, the injured person must serve the offer on his or her UM/EIUM carrier. Id. The UM/EUIM carrier then has sixty (60) days from receipt of notice to accept or reject the offer. If the UM or EUIM carrier rejects the settlement, it must then pay the insured the amount offered and may then subrogate against the liability carrier and the liability carrier’s insured. Id.
For more information on Maryland UM/UIM coverage and subrogation, contact Isaiah Richie at [email protected].