Summary: Part C of the personal auto policy is uninsured motorists coverage. This coverage is optional for the insured and offers compensatory damages payments to an insured who is injured through a motor vehicle accident with an uninsured motorist. This article discusses the insuring agreement, the exclusions, and the other clauses that make up part C of the PAP.

Topics covered: Insuring agreement

Insured

Uninsured motor vehicle

Exclusions

Limit of liability

Other insurance

Arbitration provision

Underinsured motorists endorsement

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Insuring Agreement

We will pay compensatory damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" because of "bodily injury":

1.     Sustained by an "insured"; and

2.     Caused by an accident.

The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the "uninsured motor vehicle".

Any judgment for damages arising out of a suit brought without our consent is not binding on us.

Analysis

An example of this coverage is if A is injured by a negligent driver, B, who has no insurance on his auto, A's uninsured motorists coverage will pay the damages to A that he, by rights, should have recovered from B.

It should be noted that the word "compensatory" is an important item found in the current personal auto policy. This descriptive term was put into the insuring agreement to make clear that damages other than compensatory damages, such as punitive damages, are not covered by this part of the policy. This point is bolstered further by a specific exclusion of punitive or exemplary damages, and both items serve to counter the argument that if the policy does not specifically state that punitive damages are excluded, they are then covered.

A key element of the uninsured motorists coverage insuring agreement is that the operator or owner of the uninsured motor vehicle must be legally responsible to pay for the insured's damages. The insurance company has no obligation to pay for an insured's injuries unless the elements of legal liability are present. That is one of the reasons uninsured motorists coverage has been described as reverse liability insurance. Think of uninsured motorists insurance in this way: the insurance company becomes, in a sense, the liability insurer of any uninsured motorist that injures its insured.

Insured