Massachusetts Automobile Insurance Policies issued on or after January 1, 1993, must provide at least $20,000 per person, $40,000 per accident, in protection for an insured who is legally entitled to recover damages from the owners or operators of uninsured motor vehicles. G.L. c. 175, §113C; G.L. c. 175, §113L. In addition, an insurer must now offer additional limits of uninsured motorist coverage, up to $35,000 per person, $80,000 per accident, but these limits cannot exceed the limits of optional bodily injury coverage purchased by the insured. G.L. c. 175, §113C.
For Massachusetts automobile insurance policies issued after January 1, 1989, underinsured motorist coverage is no longer mandatory. However, insurers are required to offer policyholders the option of purchasing underinsured coverage.
In order to recover on an uninsured-underinsured motorist claim, the injured party must prove (a) he is an insured, (b) that the driver is an uninsured-underinsured motorist, and (c) that the uninsured-underinsured was negligent, so that the injured party is legally entitled to recover from him.
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An insured is generally defined as the named insured and the household members related to him by blood, marriage, or adoption. However, the policy affording uninsured-underinsured coverage differs according to whether the injured party was a named insured, a household member, an occupant of the insured vehicle, an employee, or a corporation.
A person who is named under any Massachusetts automobile insurance policy can only recover uninsured motorist benefits under a policy naming that individual as an insured. G.L. c. 175, §113L. A named insured injured while occupying a vehicle he owns is limited to recover such benefits under the policy insuring the vehicle involved in the accident. If a named insured is injured while occupying a vehicle owned by someone else, he may recover under the policy on which he is named that provides the highest available limits of coverage. Recovery based upon an injured party's status as a household member is only available if he does not have his own Massachusetts automobile insurance. G.L. c. 175, §113L; DePina v. Safety Ins. Co., 419 Mass. 135 (1994). In that instance, the injured party is entitled to seek recovery from the household policy that provides the highest limits of uninsured motorist coverage, regardless of the vehicle in which he was injured. G.L. c. 175, §113L.
An occupant of the insured automobile is entitled to seek recovery of uninsured-underinsured benefits under the policy insuring the vehicle involved in the accident if he (1) does not have a Massachusetts automobile insurance policy of his own and (2) is not covered under a Massachusetts automobile insurance policy issued to a member of his household. G.L. c. 175, §113L.
Pursuant to G.L. c. 152, §23, the exclusivity provision of the Massachusetts Workers' Compensation Act precludes an employee from recovering uninsured-underinsured motorist benefits under an employer's policy when the employee was injured in the course and scope of his employment. National Union Fire Ins. Co. v. Figaratto, 423 Mass. 346 (1996); Spaneas v. Travelers Ins. Co., 423 Mass. 352 (1996). This prohibition does not apply where the employer purchases specific insurance that provides uninsured-underinsured motorist coverage to employees who are injured in the course and scope of employment while riding in company-owned vehicles. National Union, 423 Mass. at 350.
Once municipalities purchase automobile insurance, they are no longer self-insureds, but, for purposes of uninsured motorist (UM) statute, they become akin to private insureds that purchase insurance for their own motor vehicles. Massachusetts Insurers Insolvency Fund v. Premier Ins. Co., 449 Mass. 422 (2007).
Finally, in instances where a corporate entity is the named insured, no uninsured-underinsured motorist coverage can be triggered because it is incapable of sustaining bodily injury or of having household members. See Andrade v. Aetna Life & Cas. Co., 35 Mass.App.Ct. 175 (1993); Jacobs v. United States Fidelity & Guar. Co., 417 Mass. 75 (1994). This principle is also true when closely held corporations and trusts are the named insured.
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(i.) No liability insurance coverage. An uninsured motorist is one whose motor vehicle has no liability insurance coverage. Reasons for no liability coverage include: vehicles in Massachusetts that were never insured, vehicles in Massachusetts whose insurance was cancelled for non-payment of premium, vehicles in Massachusetts that were insured on the date of loss but the insurer became insolvent, and uninsured vehicles from states outside Massachusetts.
(ii.) Hit-and-Run Drivers. When the operator of vehicle causing a hit-and- run accident is unidentified, the hit-and-run operator is considered an uninsured motorist. It should also be noted that a hit-and-run accident does not actually require physical contact; the hit-and-run vehicle can just cause the accident. See e.g., Surrey v. Lumbermens Mut. Cas. Co., 384 Mass. 171, 175-177 (1981).
Uninsured motorist (UM) benefits were available for insured who was injured as result of combined negligence of insured tortfeasor and unidentified hit-and-run driver; the liability insurance proceeds were insufficient fully to compensate the insured for his damages. Gabriel v. Premier Ins. Co. of Mass., 445 Mass. 1026 (2006).
(iii.) Insurer's denial. For purposes of G.L. c. 175, §113L, an insurer's denial of a claim on the ground that its insured is not legally responsible does not render its insured "uninsured."
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An underinsured motorist is one whose vehicle has liability insurance coverage but that coverage is insufficient to satisfy the insured for her injuries. The extent to which underinsured benefits are available is determined by comparing the underinsured coverage limits to the total of all bodily injury coverage available. A tortfeasor is not underinsured when the bodily injury limits equal or exceed the insured's underinsured motorist coverage. G.L. c. 175, §113L(2). Valley Forge Ins. Co. v. Katz, 63 Mass.App.Ct. 759, 765-766 (2005).
Whether the tortfeasor's per accident limits are depleted by payments to other claimants is irrelevant. Alguila v. Safety Ins. Co., 416 Mass. 494 (1993). Similarly, the amount of liability proceeds actually recovered by the injured party is irrelevant to determining whether underinsured motorist coverage is applicable. Valley Forge Ins. Co., 63 Mass.App.Ct. at 766-768 (stating that G.L. c. 175, § 113L will be strictly construed, "even in the face of equitable considerations").
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The insured must "promptly notify" its insurer of any accident and must do so within twenty-four hours in the case of a hit-and-run accident. While these notice provisions have been upheld by the Massachusetts Supreme Judicial Court, an insurer is not relieved of its obligation to provide underinsured motorist coverage unless it proves that it was prejudiced by the "late" notice. Goodman v. American Cas. Co., 419 Mass. 138 (1994); Lighter v. Lumbermens Mut. Cas. Co., 43 Mass.App.Ct. 415 (1997). It is likely that this prejudice requirement also applies to "late" notice of uninsured motorist claims.
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An injured party seeking uninsured-underinsured motorist benefits must cooperate with the insurer's investigation of the claim, including submission to an examination under oath and/or independent medical examinations at the insurer's request. It is arguable that these investigative tools of the insurer constitute conditions precedent to uninsured-underinsured motorist coverage. To the extent that they can be so construed, the failure of an injured party to so cooperate may result in forfeiture of coverage, without regard to whether the insurer experienced prejudice.
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Disputed claims for uninsurance and underinsurance benefits are brought against the insurer in arbitration. The arbitrator will determine the questions of liability and damages. Lawsuits relative to uninsured-underinsured claims are only appropriate to resolve a coverage question and to enforce arbitration of the claim pursuant to the insurance policy.
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No stacking of uninsured or underinsured motorist coverage is allowed under any Massachusetts automobile insurance policy issued on or after January 1, 1989. G.L. c. 175, §113L(5); Arbella Mut. Ins. Co. v. Hughes, 36 Mass.App.Ct. 926 (1994). Therefore, an injured party may only recover up to a maximum of one uninsured-underinsured policy limit.
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When triggered, the available underinsured benefits are calculated by deducting the available liability coverage limits from the total damages of the injured party. However, this amount shall not exceed the underinsured motorist limits in the insured's policy.
An insured is entitled to deduct or offset certain proceeds received by an injured party as a result of the subject accident from the value of the injured party's claim in calculating uninsured-underinsured motorist benefits.
a. Bodily Injury Liability Proceeds from Tortfeasor(s). Provided that the injured party is fully compensated for his bodily injuries, an insurer can deduct the amount of any tortfeasor proceeds paid to the injured party, from the value of his uninsured claim.
Further, as noted above, underinsured motorist coverage is calculated be deducting the available liability limits of the tortfeasor(s). G.L. c. 175, §113L(2). This rule applies regardless of whether the injured party settles with the tortfeasor for less than the available liability limits of the tortfeasor's policy. Id.
b. Workers' Compensation Benefits. All amounts of past and future workers' compensation benefits paid to the injured party can be deducted from the value of his damages in determining the uninsured-underinsured benefits. Mayo v. Aetna Cas. & Sur. Co., 419 Mass. 596 (1995). However, a Superior Court judge has held that where a worker's compensation insurer is repaid some of the benefits paid to the plaintiff from a third party action, the uninsured motorist carrier is only entitled to deduct the net workers' compensation benefits received by the plaintiff. Commonwealth Mutual Ins. Co. v. Umanzio, (Middlesex Superior Court (Gants, J.), No. 02004-12, June 25, 2002).
c. Personal Injury Protection (P.I.P.) or No Fault Benefits. An insurer is entitled to reduce the injured party's claim by the amount of P.I.P. benefits he received. Amica Mut. Ins. Co. v. Bagley, 28 Mass.App.Ct. 85 (1989). This deduction includes such benefits paid to an injured party under a policy issued outside of Massachusetts. Id.
d. Medical Payments (MedPay) Coverage. An insurer cannot deduct payments made on behalf of an injured party pursuant to the medical payments coverage of any Massachusetts automobile insurance policy from the value of the injured party's claim. Allstate Ins. Co. v. Bearce, 412 Mass. 442 (1992).
e. Health Insurance. Health insurers are not permitted to lien uninsured-underinsured motorist benefits. Meyers v. Bay State Health Care, Inc., 414 Mass. 727 (1993).
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Pursuant to G.L. c. 175, §113L(4), an insurer is entitled to the proceeds of any settlement or judgment in favor of the insured against a third-party wrongdoer, up to the amount of mandatory uninsured coverage paid by said insurer, less the cost to the insured of procuring such settlement or judgment proceeds. G.L. c. 175, §113L(4).
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Uninsured-underinsured claims are subject to a six-year statute of limitations. Goodman v. American Cas. Co., 419 Mass. 138 (1994). The statute of limitations period begins to run when the insurer either refuses to submit to arbitration or denies the claim. Peerless Ins. Co. v. Boyle, 422 Mass. 1011 (1996); Berkshire Mut. Ins. Co. v. Burbank, 422 Mass. 659 (1996).
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Uninsured motorist coverage:
(i.) Consent of Owner. A party injured while occupying a vehicle without the consent of the owner is limited to $35,000 per person/$80,000 per accident uninsured motorist coverage limits.
(ii.) Public or Livery Conveyance. A party injured while occupying the named insured's auto while it is being used as a public or livery conveyance is limited to $35,000 per person/$80,000 per accident.
(iii.) Racing, speed, stunt, or demolition contest. A party injured while an auto is being operated in any prearranged or organized racing, speed, stunting or demolition contest or activity or in practice or preparation for any such contest or activity is limited to $35,000 per person/$80,000 per accident.
(iv.) Insurer's Consent to Settle. Under the Massachusetts Automobile Insurance Policy, a consent-to-settle provision requires that the insurer consent to a settlement entered into by an insured. However, in order to avoid payment under the policy pursuant to this provision, including underinsured motorist coverage, the insurer must demonstrate material prejudice from the insured's failure to obtain consent.
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(i.) Consent of owner. Underinsured motorist coverage does not apply to parties who sustain injury while using a vehicle without the consent of the owner. Gordon v. Safety Ins. Co., 417 Mass. 687 (1994). Therefore, a party injured while occupying a vehicle without the consent of the owner is not entitled to underinsured motorist benefits. Id.
(ii.) Insurer's Consent to Settle. Under the Massachusetts Automobile Insurance Policy, a consent-to-settle provision requires that the insurer consent to a settlement entered into by an insured. However, in order to avoid payment under the policy pursuant to this provision, including underinsured motorist coverage, the insurer must demonstrate material prejudice from the insured's failure to obtain consent.
(iii.) Other exclusions to underinsured motorist coverage exist, as set forth in the Massachusetts Automobile Insurance Policy. These include those exclusions applying to all optional coverages.
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