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Missouri courts have recently come down with two decisions that are great news for consumers. For many years insurance companies have been offering something called underinsured motorist coverage. In theory this is great coverage that everyone should have. Let’s say somebody runs a stop sign, puts you in a wheelchair, but only has $25,000.00 (the state minimum) in insurance coverage. You could sue him and get a judgment for millions, but he works at a fast-food restaurant, and even if you were determined enough to try to garnish his wages from there he’d just file a bankruptcy and wipe out the debt. Under-insured coverage (“UIM”) should help that situation. If you purchased $100,000.00 in coverage, for example, your company should pay that to you in the situation we’ve just described.

Until recently, however, Missouri insurance carriers have often been able to evade that responsibility by the usage of confusing and often contradictory language buried in the fine print of the policies themselves. Here are two examples:

(1) The definition giveth, the definition taketh away: Let’s assume you have injuries in excess of $300,000.00 (medical bills, lost wages, scarring, disability, etc.). The negligent driver that caused the injuries had coverage of $100,000.00, which was paid. You have UIM coverage of $50,000.00 on your car, and assume your company will pay you that sum upon request.

But they don’t. They point to the definition of an “under-insured” car, which is buried deep within the policy and says that an under-insured car is one that has limits less than you have on your own car. Since the other car had $100,000.00, and you only have $50,000.00, then by definition you got ZERO! And Missouri courts upheld such denials of coverage.

(2) “Set-offs.” Another fine-print trick. Assume the definition problem described above doesn’t exist (and believe us, these policies are all written differently). Also assume that you again have injuries worth $300,000.00, but this time the at-fault driver had $50,000.00, and you had UIM coverage of $100,000.00. The carrier of the at-fault driver pays you’re the $50,000.00, so you figure you’ve got another $100,000.00 coming from your own company, right? Wrong… your company point to “set-off” language, again buried deep in the policy, that says before they pay anything they get to “set-off” the amount you’ve already received… $50,000.00 So, you thought you’d bought $100,000.00 of coverage, but it turns out you hadn’t when you go to apply for it!

Now, thankfully, the Court of Appeals for the Western District of Missouri has put an end to these shenanigans. In two separate opinions, they’ve ruled that this kind of “gotcha” buried in the fine print of policies won’t be tolerated. The courts noted that when people buy insurance, they look most closely at the “Declarations Page,” which is a 1-page description of the cars insured, coverages purchased, and amount of premium for each coverage. They further noted that a consumer usually doesn’t even receive the actual policy until several weeks after they’ve purchased the insurance based on the information provided in the Declarations Page, and invalidated most “gotcha” fine-print provisions at least insofar as UIM coverage is concerned.

What changes the insurance companies, courts, or legislatures will make to this new law in the future, of course, remain to be seen.