Oregon Underinsured Motorist Claims

Underinsured Motorist insurance coverage (often referred to by the acronym: “UIM”) is mandatory in all Oregon personal auto insurance policies[1]. The coverage an insured is provided is essentially identical to the coverage they also have for their losses arising from accidents caused by the negligence of uninsured drivers, except that this coverage applies in those cases where the at­fault driver does have some liability insurance coverage; but not enough to fully compensate the injured person. In such a case, depending on the amount of coverage limits the person purchased, their UIM coverage serves to cover the difference between the amount of the total value of their claim and the (insufficient) amount of liability coverage the at­fault driver had[2].

There is a recent development in Oregon law that has significantly and favorably impacted UIM coverage. Until this year, in determining the amount of UIM coverage available to an insured, a person’s insurance company was entitled to a credit, or offset, in the amount of the at­fault driver’s liability coverage limits. By way of a hypothetical example, let’s assume that someone was injured in an accident caused by someone else who had $25,000 in liability coverage for the claim, and that the injured person had $50,000 in UIM coverage limits. Under Oregon’s former law, the injured person’s insurance company would owe the person a maximum of $25,000 in UIM benefits as they would be entitled to a credit in the amount of the at­fault driver’s liability coverage limits. Effective as of the beginning of this year, this is no longer the case; instead, the coverages now “stack,” with the result that in the hypothetical example, the injured person could recover $25,000 from the at­fault party, and another $50,000 from their own insurance company.

TIP: All Oregon car insurance policies are required to include at least $25,000 in coverage (per accident) for underinsured motorist accidents. However, we have worked on dozens of claims where individuals have sustained permanent, life­changing injuries in accidents caused by underinsured motorists, i.e. they incur tens, or hundreds of thousands of dollars in medical care expenses and/or cannot return to work in their chosen line of work and experience a very large loss of income as a result, and so we recommend purchasing a significantly higher coverage limit for underinsured motorist accidents, i.e. $250,000 or $500,000 per accident.

TIP: Oregon law[3] provides as a default, if you will, that a person’s UIM coverage limits will be the same amount as their liability coverage limit. However, you can (pursuant to the same law) purchase uninsured/underinsured motorist coverage limits in an amount greater than your liability coverage limit.

Additional Resources

• [1] ORS §742.502 – Uninsured motorist coverage
• [2] The pertinent Oregon statute ­ ORS §742.504 ­defines the scope of this coverage as follows:
  “[A]ll sums that the insured, the heirs or the legal representative of the insured is legally entitled to recover as general and special damages from the owner or operator of an uninsured vehicle because of bodily injury sustained by the insured caused by accident and arising out of the ownership, maintenance or use of the uninsured vehicle.”
• [3] ORS §742.502(2)(a).
• ORS §742.510 – Property damage coverage for damage to vehicle