In a recent case, a man was severely injured after being hit by a van while riding his bicycle. The bicycle accident caused the man to suffer multiple fractures, dislocations, a collapsed lung, and significant time in the hospital.
The Wisconsin bicyclist had an insurance policy with Acuity for automobile liability including underinsurance with limits of $300,000. He also had a 1 million dollar umbrella policy.
The driver who hit him had $500,000 insurance and that company settled witht he bicylist for $500,000. The bicyclist also received an additional $10,000 from the driver of the vehicle.
The bicyclist negotiated a settlement with Acuity for $500,000 but Acuity reserved the right to appeal it and argue that it did not have to provide underinsurance on the umbrella policy.
The court interpreted the Wisconsin underinsurance statute requiring notice to insureds:
Wisconsin Stat. § 632.32(4m)(a)5 requires that insurers writing motor vehicle liability policies that do not contain UIM coverage provide policyholders notice of the availability of UIM coverage. The statute states in relevant part:
1. An insurer writing policies that insure with respect to a motor vehicle ... against loss resulting from liability imposed by law ... shall provide to one insured under each such insurance policy ... that is written by the insurer and that does not include underinsured motorist coverage written notice of the availability of underinsured motorist coverage including a brief description of the coverage....
The court went on to find that since Acuty never informed the bicyclist that he had the option of underinsured motorist on his umbrella policy, that he was entitled to underinsurance for that policy.
As to the amount of coverage that an insured will receive when an insurer fails to provide noticeo f underinsured availability, the court crafted a rule that stated,"we are persuaded that where an insurer fails to provide adequate notice of the availability of UIM coverage, the appropriate remedy is to read in only the minimum level of UIM coverage required under § 632.32(4m)(d) — $50,000 per person and $100,000 per accident."
However, in this case, because Acuity had entered into a stipulation with the injured bicyclist for $500,000 that is the amount the court ordered Acuity to pay (not the minimum 50/100).