WFJ Presents: The Ins and Outs of Underinsured Motorist Coverage in South Dakota

Injured in an accident? Do you have enough insurance coverage? Most people understand they have liability insurance to cover themselves if they cause an accident. Most people also understand they have uninsured motorist coverage in the event they are injured by a negligent driver with no insurance. Most people assume they have underinsured motorist coverage in the event the negligent driver has insufficient liability limits to cover their damages.

However, underinsured motorist coverage in South Dakota is often “illusory” given that South Dakota is a “difference of the limits” state when it comes to underinsured motorist coverage. That is, you must look at the amount of underinsured motorist coverage you have, then subtract the amount of the liability coverage the negligent driver has, and that net amount is the actual amount of coverage.

For example, assume you are seriously injured by a negligent driver who has $100,000.00 of liability insurance. You incur substantial medical bills that either you have to pay directly or are paid by health insurance, which you have to pay back (because health insurance companies have a right of reimbursement from settlement proceeds paid from a negligent driver). You then look to your own insurance company because you paid a premium for underinsured motorist benefits. Your policy says you have $100,000.00 of coverage. In reality, however, you have $0.00 in coverage because the negligent driver had $100,000.00 of liability coverage and that amount reduces your underinsured coverage. Your underinsured motorist coverage is therefore “illusory.” Depending on your circumstances, it may be prudent to address this issue with your insurance agent to fully determine the appropriate coverage.

If you have been injured in an accident please use your LegalShield membership and call a WFJ attorney for prompt legal advice.

Attorney Brad Hauswirth