A new stacking law in Maryland will benefit some victims of motor vehicle accidents by increasing the amount of money available from insurance proceeds to cover damages like medical bills, lost wages, and pain and suffering caused by at-fault drivers. Specifically, the law will allow the victim to recover up to the full amount of his or her own underinsured motorist coverage — often called UIM — in addition to damages equal to the other driver’s policy limit.
Enhanced underinsured motorist coverage
The law, which is already in effect, will apply to car insurance policies bought in the state on or after July 1, 2018. Insurance companies will then be required to offer policy buyers the new option of “enhanced underinsured motorist” coverage, referred to as EUIM.
UIM comes into play when the at-fault driver’s policy is not sufficient to cover all of the victim’s damages in a car accident — in other words, the driver is underinsured for the loss. In this situation, the victim’s UIM coverage would kick in to help make up the difference between the at-fault driver’s limit and the actual amount of loss.
Currently, Maryland operates under a so-called “gap theory” under which the victim is limited to the amount of his or her own UIM limits, even if part of the recovery comes from the at-fault driver’s policy.
For example, if the victim (or plaintiff) carries $100,000 in UIM and the defendant has a liability limit of $30,000, the victim could first get $30,000 under the defendant’s policy and then the remaining $70,000 from the plaintiff’s UIM coverage, totaling in combination the limit of the victim’s UIM coverage ($100,000). If the victim had $150,000 in damages, he or she would come up $50,000 short.
Under the new law
If the victim in our hypothetical situation had purchased the new EUIM option, the recovery would not be limited by the amount of the victim’s UIM. Rather, the two policies can “stack” to get closer to the actual damage amount.
In our example, the victim could collect $30,000 from the defendant’s policy plus the entire $100,000 from the plaintiff’s UIM stacked on top of the $30,000 for a total insurance recovery of $130,000. In this scenario, he or she would then only be $20,000 short of the total damage amount of $150,000.
A personal injury lawyer can answer questions about how the new stacking law will operate in any given situation.