Does liability insurance cover uninsured motorists? If an insured driver causes an accident with an uninsured driver in Louisiana, any settlement may be limited under the no-pay-no-play rule.
If the at-fault party is the uninsured driver, the insured party would likely rely on any uninsured motorist coverage they may have.
Any other insurance policies the uninsured driver has are unlikely to apply. Liability claims are often complex, and it may be beneficial to retain a Lafayette car accident lawyer.
What Liability Insurance Covers
Liability insurance covers injuries or property damage that the insured person causes to another person or property. Auto insurance has a liability insurance component.
A policy may include uninsured motorist coverage, but this component is for the insured’s benefit. It covers their own costs if an at-fault motorist has no auto insurance.
Other liability insurance policies, like homeowners, renters, and personal umbrella insurance, generally exclude claims arising from the use of a motor vehicle. There are cases in which policies other than an auto insurance package may apply, but they are rare.
For example, an uninsured motorist uses their own vehicle to undertake work for an employer. The employer’s commercial auto or business insurance may apply if the driver was acting within the course and scope of employment.
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Liability Insurance and UM Insurance as Components of Auto Insurance
An auto insurance policy usually consists of several types of coverage, including liability, uninsured motorist, and other coverages that address specific risks.
In Louisiana, the minimum auto insurance liability coverage required by La. Stat. Ann. § 32:861 is $15,000 per person injured, $30,000 per accident, and $25,000 for property damage. In Louisiana, insurance companies are required to offer uninsured motorist (UM) coverage, but the policyholder may decline this component in writing.
Liability insurance is therefore required, while UM coverage is optional but recommended. UM coverage protects the insured party if they are involved in an accident in which the at-fault driver is completely uninsured. When bundled with underinsured motorist coverage, it also helps when an at-fault driver has insurance, but their coverage is insufficient.
Liability Insurance Coverage, Uninsured Motorists, and Louisiana’s No-Pay-No-Play Rule
Suppose an insured driver causes an accident. The driver who causes an accident is the liable party, and their liability insurance would ordinarily cover the other driver’s damages. However, when the party that was not at fault is not insured as required by Louisiana law, they may not be able to claim all their damages from the at-fault driver’s insurance.
Even though the uninsured driver was not at fault, La. Stat. Ann. § 32:866, known as the “No-Pay-No-Play-Rule,” applies. It limits compensation by barring an uninsured motorist from recovering the first $15,000 in bodily injury damages and the first $25,000 in property damage.
In practice, this means that an uninsured motorist can still claim against an insured motorist’s insurance, but their compensation will usually be reduced. For example, if a bodily injury claim totals $30,000, the uninsured driver may only receive $15,000.
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When Liability Insurance Covers Uninsured Motorists Who Were Not At-Fault
There are rare exceptions to the No-Pay-No-Play rule. An uninsured motorist can claim full compensation against an at-fault motorist’s insurance when the uninsured motorist was:
- Legally parked
- Involved in an accident with an intoxicated driver
- Involved in an accident in which the at-fault driver fled the scene
- Driving a vehicle exempt from registration requirements
In other words, the No–Pay–No–Play rule is waived when the uninsured driver was not using their vehicle, the insured driver committed certain offenses, or the vehicle was exempt from the usual rules. As an example of the latter, an off-road vehicle used on private property need not be registered.
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Uninsured and Underinsured Motorist Coverage as Insurance Components Worth Retaining
In Louisiana, insurance companies must offer uninsured motorist (UM) coverage, often bundled with underinsured motorist (UIM) coverage, as a standard component of auto insurance policies. Drivers who hope to reduce their premiums may decline this component, but doing so may be shortsighted.
Although only a small percentage of Louisiana drivers are uninsured, they may be high-risk drivers. A study on how risky uninsured drivers are indicates they may be 34% more likely to be involved in accidents.
The study concludes that they are a high risk to traffic safety. They also pose a financial risk, since they are unlikely to have the resources to cover accident-related damages.
Given that accident-related damages can amount to substantial sums of money, you may find that uninsured motorist coverage is worth it. Although the odds against being in an accident with one may be comparatively low, it could be the only way to recover your costs if this contingency arises.
Contingencies and Damages Covered by UM Insurance
On the surface, it may seem that UM insurance covers accidents involving identifiable drivers. However, consider how you can seek compensation for a hit-and-run accident in which the at-fault driver is never identified.
In this case, you may qualify for a UM claim from your own insurance policy. Bear in mind, your liability insurance doesn’t cover uninsured motorists’ damage to you, but UM coverage may, and it usually also covers you when unidentified motorists flee the scene.
UM insurance may cover medical expenses and lost wages. Depending on the terms of the insurance policy, it may also cover property damage.
Insurance Questions Can Be More Complex Than They Initially Seem
No matter which perspective you take, the question of whether liability insurance covers uninsured motorists is nuanced. Broadly, one can say that your own liability insurance won’t cover you if an uninsured motorist causes an accident. Turn fault around, and the answer is a cautious “yes” subject to no-pay-no-play rules.
If you’re asking this question because you’re hoping to be compensated after an accident you didn’t cause, your best option would be to consult a professional who understands all the possible avenues you can explore.
Galloway Jefcoat Injury Attorneys may be able to help. Call us for a free case review.
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