Employee hurt in car crash collects from employer’s auto insurer

If you’re injured in an auto accident, there’s a chance that the person who caused the accident won’t have enough insurance to cover your injuries. Your own insurance policy might provide “underinsured motorist” (UIM) benefits to help you out in these situations.

UIM insurance provides for some or all of the difference between the amount of your injuries and the amount that’s covered by someone else’s insurance policy.

And if you drive as part of your job, your employer’s auto insurance policy might also provide for UIM benefits to cover injuries you suffer as a result of a work-related car accident.

An interesting case arose in Pennsylvania, when a police officer was severely hurt in a car crash while on duty. The person who caused the accident had only $25,000 in coverage. The officer’s injuries were far more serious, so he sought UIM benefits from the police department’s insurer.

But the insurance company denied the benefits…because the department’s insurance policy said it wouldn’t cover any accidents if the injured employee was also eligible for workers’ compensation (which the offer was).

Does that seem fair to you?

It sure didn’t seem fair to the officer, and he took that case all the way to the Pennsylvania Supreme Court, which sided with him and ordered the insurance company to pay the benefits anyway.

The insurance policy was basically a trick, the court ruled. Virtually any employee who was injured on the job would be eligible for workers’ comp, it noted. So while the policy said it would provide UIM coverage to injured workers, in fact any time a worker was injured, the insurance company could simply deny coverage because of the workers’ comp rule.

That meant that the police department was paying a premium for UIM coverage but not getting anything in return, which was unfair, the court said. Since the department had paid a premium for UIM coverage, the insurance company had to provide it and couldn’t hide behind the workers’ comp exclusion.