Comparing Apples to Oranges

By Sarah B. Cole, Esq.*

What is an “underinsured” motor vehicle in Delaware? Up until a short time ago, if all applicable policies of bodily injury liability coverage available totaled less than the amount of the claimant’s own uninsured/underinsured motorist coverage, that claimant would be deemed “underinsured.” Under those circumstances, the claimant could access his or her own underinsured motorist policy and seek additional compensation through that coverage if he or she could an prove that her damages so warranted. Conversely, if a claimant’s uninsured/underinsured coverage equaled or was less than the tortfeasor’s bodily injury coverage, a claimant could not access his or her own underinsured coverage because, under prior Delaware law, that person was not underinsured.

Recently, however, the law has changed. Instead of comparing apples to apples, we are now comparing apples to oranges. Delaware’s underinsured motorist insurance statute, Section 3902 of Title 18, was recently amended to redefine the legal meaning of an “underinsured” motor vehicle. The change to the law is as follows:

(2) An underinsured motor vehicle is one for which there may be bodily injury liability coverage in effect, but the limits of bodily injury liability coverage under all bonds and insurance policies applicable at the time of the accident are less than the damages sustained by the insured.

As the law in Delaware now stands, if a claimant’s damages exceed a tortfeasor’s bodily injury coverage, the claimant can access his or her own underinsured coverage. This applies to all motor vehicle insurance policies that were issued or renewed in Delaware after January 3, 2014. For those policies, a claimant is no longer limited by a comparison of the tortfeasor’s coverage to their own. Rather than comparing available coverage between the claimant and tortfeasor, the focus is on whether a claimant’s damages exceed the bodily injury liability coverage. According to the synopsis for the Senate Bill that proposed this change, the purpose of the amendment is to “allow innocent victims of motor vehicle collisions to access their own underinsured insurance benefits in circumstances where the victim’s damages are greater than the amount of the negligent driver’s insurance policy limits.”

Prior to the change in the law, Delaware courts had historically interpreted the underinsured motorist law to preclude claimants from seeking underinsured motorist benefits when a claimant and the tortfeasor had the same policy limits or where the claimant’s uninsured/underinsured policy limits were less than those available to him or her through the tortfeasor’s bodily injury limits. Nationwide Mut. Ins. Co. v. Williams, 695 A.2d 1124, 1126-1127 (Del.Super. 1997). The purpose of underinsured motorist coverage, as it was previously reasoned, was to put the insured claimant in the same position he or she would have been had the tortfeasor held the same amount of coverage as the claimant. Brown v. Comegys, 500 A.2d 611, 614 (Del.Super. 1985).

The extent of a claimant’s damages, of course, can be a very subjective and fluid concept, whereas the extent of bodily injury coverage is certainly more ascertainable. As a result of the change in Delaware law, it can be anticipated that the number of underinsured motorist lawsuits will rise in Delaware because a claimant is no longer prevented from accessing his or her underinsured benefits based upon a comparison of the coverage of the tortfeasor and the uninsured/underinsured coverage possessed by the claimant.

*Sarah is an associate in our Wilmington, Delaware office who can be reached at 302.552.4364 or sbcole@mdwcg.com.

Defense Digest, Vol. 20, No. 3, September 2014

Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. Copyright © 2014 Marshall Dennehey Warner Coleman & Goggin, all rights reserved. This article may not be reprinted without the express written permission of our firm.