California Assembly Reviews Underinsured Motorist Coverage Law

A bill introduced this session in the California Assembly regarding underinsured motorist coverage has been referred by the Committee on Insurance for further committee assignments. AB 1063 expands the scope of underinsured motorist coverage by repealing limitations written into Section 11580.2 of the Insurance Code.

Under current law, if bodily injury results from a motor vehicle accident, the maximum liability of an underinsured motorist coverage provider is the policy limit minus any amounts paid to the insured by any party held liable for the injury. AB 1063 strikes the language allowing the insurer to reduce its policy obligations by deducting amounts paid to the policy holder from other sources.

The bill also redefines "underinsured motor vehicle" as "an insured vehicle which has liability limits, or coverage available, less than the damages suffered by the injured person or persons." The current definition is "a vehicle that is insured for an amount that is less than the underinsured motorist limits carried on the vehicle of the injured party." In addition, the bill clarifies that underinsured motorist coverage can be applied before other sources of recovery have provided compensation.

The author of the bill, Assemblyman Steven C. Bradford of Inglewood, told the committee that consumers are not getting the insurance coverage they paid for under existing law. Bradford notes that half of other states have similarly defined underinsured motorist coverage. One group that has supported the bill, the Consumer Attorneys of California (CAOC), argues that an insured's right to recovery under a purchased policy should not depend on the personal resources of the driver who hit them.

If the bill passes, motorists and passengers who suffer personal injury due to another party's negligence should be able to more quickly obtain the compensation they need for medical expenses and vehicle damage.