California Insurance Code: Uninsured Motorist Coverage

Uninsured motorist coverage is a critical aspect of auto insurance in California, providing financial protection when drivers are involved in accidents with uninsured or underinsured drivers. The California Insurance Code (CIC) outlines specific provisions regarding uninsured and underinsured motorist (UM/UIM) coverage to ensure that policyholders have access to compensation in such situations. These regulations are designed to safeguard drivers, passengers, and other road users, promoting fairness and accountability on the road.

Key Sections of the California Insurance Code for Uninsured Motorist Coverage

1. Section 11580.2 – Uninsured Motorist Coverage Requirements

The primary section of the California Insurance Code governing uninsured motorist coverage is Section 11580.2. This section mandates that auto insurance policies issued in California must include uninsured motorist (UM) and underinsured motorist (UIM) coverage unless the policyholder explicitly declines it in writing.

Mandatory Offer of UM Coverage: Insurance companies must offer UM coverage when issuing a policy. If the policyholder chooses not to include this coverage, they must sign a written waiver.
Minimum Coverage Limits: The minimum limits for uninsured motorist coverage in California are the same as the state's minimum liability insurance requirements:
- $15,000 for bodily injury or death per person.
- $30,000 for bodily injury or death per accident.
Policyholders can choose higher limits, but they cannot have uninsured motorist coverage limits that are lower than their liability coverage limits.
Coverage for Hit-and-Run Incidents: UM coverage applies if an insured driver is involved in an accident with a hit-and-run driver, as long as physical contact occurred between the vehicles and the policyholder can provide evidence of the incident.
Underinsured Motorist Coverage (UIM): This coverage is designed to provide additional compensation when an at-fault driver has liability insurance, but their policy limits are insufficient to cover the full extent of the damages.

2. Section 11580.26 – Insured's Right to Arbitration

California law provides the right to arbitration for disputes involving uninsured motorist claims under Section 11580.26. This means that if a policyholder and their insurance company disagree on the amount owed under UM/UIM coverage, they have the right to resolve the dispute through arbitration rather than going to court.

Arbitration Process: Arbitration is a less formal legal process where both parties present their case to a neutral third party, known as an arbitrator. The decision made by the arbitrator is typically binding.
Filing for Arbitration: The policyholder must notify the insurance company in writing that they wish to proceed with arbitration. The insurer is required to engage in the process once a demand for arbitration has been made.

Arbitration helps streamline the resolution of disputes and provides a faster alternative to litigation for policyholders seeking compensation under their uninsured motorist coverage.

How Uninsured Motorist Coverage Works in California

Uninsured and underinsured motorist coverage in California functions to protect drivers when they are in accidents where the other party lacks sufficient insurance. Here’s how each type of coverage works:

Uninsured Motorist (UM) Coverage:

Scenario: If you are in an accident where the at-fault driver does not have any auto insurance, your UM coverage pays for your medical expenses, lost wages, and other damages up to your policy limits.
Hit-and-Run Accidents: UM coverage also applies in hit-and-run scenarios where the responsible driver cannot be identified, provided physical contact occurred between the vehicles.

Underinsured Motorist (UIM) Coverage:

Scenario: If the at-fault driver has insurance but their policy limits are too low to cover all of your damages, your UIM coverage can make up the difference, up to the limits of your policy.
Example: If the other driver's policy covers $15,000 in damages, but your medical bills total $30,000, your UIM coverage could pay the additional $15,000, provided you have sufficient UIM coverage limits.

This coverage is particularly important in California, where there is a relatively high rate of uninsured drivers. Without UM/UIM coverage, drivers could be left paying out-of-pocket for injuries and damages caused by drivers who do not have adequate insurance.

Policyholder Rights Under Uninsured Motorist Coverage

Policyholders in California have specific rights under the state’s uninsured motorist coverage laws, including:

Right to a Written Waiver: If a policyholder decides to opt out of UM coverage, they must provide a signed written waiver. If an insurer fails to obtain this waiver, the policyholder may still be entitled to UM coverage.
Right to Arbitration: As mentioned earlier, if there is a dispute over a UM/UIM claim, the policyholder has the right to request arbitration to resolve the matter. This ensures that policyholders have a fair chance to present their case without needing to go through the lengthy court process.
Right to Recover Damages: UM/UIM coverage allows policyholders to recover compensation for:
- Medical Expenses: Such as hospital bills, rehabilitation costs, and ongoing medical care.
- Lost Wages: Compensation for time missed from work due to injuries.
- Pain and Suffering: Compensation for the physical and emotional distress caused by the accident.

These rights ensure that policyholders are not left without recourse when facing accidents with uninsured or underinsured drivers.

Declining Uninsured Motorist Coverage: What You Need to Know

While insurers are required to offer UM/UIM coverage, policyholders do have the option to decline it. Here are some important considerations:

Written Rejection Required: Declining uninsured motorist coverage must be done in writing. This document serves as proof that the coverage was offered but rejected by the policyholder.
Implications of Declining Coverage: If a policyholder opts out of UM/UIM coverage, they will be responsible for their own expenses if they are involved in an accident with an uninsured or underinsured driver. This could result in significant out-of-pocket costs.
Why Some People Decline: Some policyholders may choose to decline UM coverage to reduce their insurance premiums, but it’s essential to weigh the potential financial risks against the savings.

Declining UM coverage may not be advisable for many drivers, given the financial protection it offers in accidents with uninsured or underinsured drivers.

How to File an Uninsured Motorist Claim in California

If you find yourself needing to file an uninsured motorist claim in California, follow these steps:

Notify Your Insurer: Report the accident to your insurance company as soon as possible. Provide details about the incident, including information about the other driver, any witnesses, and a police report if available.
Gather Documentation: Collect evidence such as photographs of the accident scene, medical records, repair estimates, and any witness statements. This information will be critical during the claims process.
Submit a UM/UIM Claim: Work with your insurance company to submit a claim under your UM/UIM coverage. Be sure to provide all requested documentation to facilitate the claims process.
Negotiate the Settlement: The insurer may offer a settlement amount. If you believe the offer is too low, you have the right to negotiate. You may also consider hiring a lawyer to represent your interests.
Request Arbitration if Necessary: If a fair settlement cannot be reached, you can request arbitration to resolve the dispute.

Conclusion

The California Insurance Code provides important protections for drivers through its regulations on uninsured motorist coverage. Understanding Section 11580.2 and the requirements for UM/UIM coverage can help policyholders make informed decisions about their auto insurance policies and protect themselves financially in case of accidents with uninsured or underinsured drivers. For those involved in disputes over claims, the option of arbitration provides a pathway to resolving issues without resorting to litigation.

As California continues to have a significant number of uninsured drivers on the road, uninsured motorist coverage remains a valuable aspect of any auto insurance policy, offering peace of mind and financial protection when it is most needed.