In yet another case of an insurance company having to be compelled to do right by its own insured, the Wisconsin Supreme Court ruled that insurance companies could not base underinsured motorist coverage on the liable party’s coverage limits without regard to the actual recovery.
Alison Welin was covered under an American Family policy that included $300,000 in underinsured motorist coverage. She was injured in an accident, and the other driver was determined to be at fault. The responsible driver had $300,000 in liability coverage.
Welin received $250,000 from the responsible party’s insurance carrier. The other $50,000 went to another victim.
It is undisputed that Welin’s injuries exceeded the $250,000 she received from the other driver’s insurance company. However, American Family determines “underinsured” based on the liability limits of the responsible driver’s policy, not on actual payments received. Since the responsible driver’s policy value was equal to Welin’s underinsured motorist coverage, American Family determined that the driver was not “underinsured” by the company’s definition, and that Welin was not entitled to additional compensation from her underinsured motorist coverage.
The Wisconsin Supreme Court ruled that insurance companies cannot base the determination as to whether or not a motorist is “underinsured” on policy limits alone, without regard to the number of personal injury victims and actual recovery.