You may not know it, but your large insurance policy may not cover the people closest to you. This issue comes up occasionally, and involves drivers causing collisions which injury their family members riding as passengers. Recently, I read of an instance of a husband driving his car with his wife as a passenger. The husband caused an accident, which resulted in a substantial injury to his wife. The husband and wife carried a large policy, I think their liability limits were it was either $300,000 or $500,000 per person, per incident, but when the wife made a claim, the insurer informed the wife’s attorney that the coverage for her was reduced to $30,000 (the Maryland state minimum).
The adjuster was not lying. The policy had a VALID EXCLUSION. The policy stated under the Exclusions section that the liability coverage does NOT apply:
To bodily injury to any insured, or to any relative of an insured residing in his household in excess of the financial responsibility limits required by Maryland law. This exclusion does not apply if the first named insured has purchased Supplemental Resident Relative Liability coverage.
This is a big deal. If you cause an accident that injures your husband, wife, child, or other resident relative, there may not be enough money to even cover their bills. You may think you have a $100,000, $300,000, or even a $1,000,000 policy, but when you cause injury to the people that drive in your car the most, you may have the lowest possible coverage allowed in Maryland.
This exclusion has been litigated and held to be valid. The reasoning:to prevent collusion between the driver and the injured family member. What this means is that the Court or the legislature believe that claimants are so likely to conspire to build a claim, that it is okay to permit an exclusion that does not require a written waiver. What the Court or legislature fail to realize is that when damages reach $100,000, $3000,000, and $1,000,000, the injuries are primarily objective and cannot be faked.
My home auto insurance has the above exclusion as well, but my insurer offers separate coverage that can be purchased to cover resident relatives. How much do I pay for that coverage? About $17 every 6 months. It is a terrible exclusion that most people are not aware of until it is too late, so be careful.
My advice is to check your policies. Whether you have Geico, USAA, State Farm, MAIF, the Elephant, or whatever, make sure you have all the coverages you need; read your policy; and make sure you understand it.
If you don’t understand your policy, you may wish to speak to an attorney, and not just rely on your insurer to explain it.
By Craig I. Meyers, Esq.