New Case Law in Colorado Regarding Stacking of Underinsured Motorist Insurance (UIM)

There is new case law in Colorado regarding the stacking of underinsured motorist insurance (UIM). Per the Supreme Court case holding (No. 05SA369, In Re State Farm Mutual Auto. Ins. Co. v. Progressive Mutual Ins. Co. – Automobile Insurance – Underinsured Motorist – Uninsured Motorist Stacking – Limits of Liability), insureds who are insured persons under multiple UIM policies can stack those polices to determine whether the tortfeasor was underinsured. Until now, conventional thought was that the tortfeasor coverage was measured against an individual UIM policy, not the sum of multiple policies, to see if the tortfeasor was underinsured

For example, if tortfeasor has $100K in liability coverage, and the insured victim has two UIM policies of $100K each ($200K total), (1) the driver is underinsured as a matter of law, and (2) the tort victim can recover the $200k less an offset of $100K paid by tortfeasor’s insurance, for a net recovery of $100K to be shared equally by the two UIM insurers.

Before this decision, insurers were uniformly denying any UIM coverage when tortfeasor’s coverage was equal to or less than the individual UIM policy limits. Plaintiff’s attorneys should be able to use this decision to their client’s advantage. If you have an auto accident case you should search high and low for all UIM coverages in which your client would or may be an insured person, such as resident relative status with persons who have personal auto policies. Holly knows how to do this as well as anyone I have known.

Incidentally, Colorado may be the only state in which this type of stacking is allowed. The decision is based on statutory language, C.R.S 10-4-609, which is distinct and different in each state for UM/UIM coverage.

Opinions of the Colorado Supreme Court are available to the public and can be accessed through the Court’s homepage.