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New Underinsured Case Law Allows Stacking of Policies in Colorado

In September 2006 the Colorado Supreme Court issued a decision which finally settles the issue of the stacking of underinsured motorists coverage (UIM) in the State of Colorado. If your policy contains UM/UIM (or “U”) coverage which provides both uninsured and underinsured motorists protection, which it should (check your auto policy “declarations page”), this new case clarifies when such coverage can be stacked or added to additional UIM coverage found in other applicable policies. This office has always argued and in fact been involved in other appellate decisions addressing the ability of an injured person to stack together the limits under separate UIM policies. The new case of In Re: State Farm Mutual Auto Ins.Co. v. Progressive Mutual Ins.Co finally resolves this issue in favor of stacking coverage.The decision can be read at www.courts.state.co.us/supct/opinions/2005/05SA369.pdf .

An insured is typically able to file a claim for UIM coverage under his or her own automobile policy if the limits of the UIM coverage exceeds the limits of liability on the insurance policy insuring the responsible party. For example, if the responsible driver’s insurance policy had limits of $50,000 and the injured UIM insured had policy limits of $100,000, then the UIM policy is triggered because it is greater than the liability limits. The UIM insurance carrier is entitled to offset or reduce the amount of its limits by the amount paid by the responsible person’s insurance company, so, in this example, an additional $50,000 in coverage is available to the injured person under the UIM policy. However, if the UIM policy had been $50,000, which is equal to the responsible party’s insurance limits, the UIM coverage would not have been triggered. If the injured party is insured under a separate applicable UIM policy, this new Supreme Court case settles the age old argument that multiple UIM policies may be added together first (“stacked”) before the comparison is made to the responsible party’s insurance limits.

The new State Farm v. Progressive case decision clearly opens the door for additional coverage for victims of automobile accidents who have potential multiple UIM policies to look under. If you are a passenger in a vehicle, the UIM coverage attached to the vehicle as well as your own personal automobile UIM coverage may apply. Additionally, you may also have additional UIM coverage under policies owned by relatives with whom you live. The attorney should ask questions regarding all potential policies under which you may be insured.

Click here for additional discussion of UM/UIM coverage claims in Colorado.

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