New York state. I was involved in a 3 car accident that I was deemed at fault. The driver in the 2nd car is claiming injury. I had $25k per person liability limit at the time of loss. I was told by my insurance adjuster that she also has underinsured motorist coverage in her policy of $25k, which would cover additional expenses if they exceed $25k. I was told on this forum by one attorney that this does not apply if her treatment/loss from work exceeds my policy limits. If this does apply would this have to be exhausted before they could sue me?
Underinsured coverage only applies if the limits of the underinsured policy exceed the limits of any applicable liability policy. Since both policies are for $25k, her underinsurance would not apply. If your adjuster meant that she had a $50k underinsured policy, an additional $25k would be available to her. The injured party can sue you regardless of the coverages available as she could potentially seek to recover from you personally.
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The party who is making the claim has the same policy limits as you do, therefore, she has no additional coverage for her bodily injury claim. Hopefully her injuries do not exceed the amount of your insurance limits. He medical expenses should be paid for by her own insurance company, so your exposure is likely limited to her pain and suffering claims.
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If both policies are 25k, no.
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Underinsurance applies in NY if your policy underinsurance is greater than the other vehicles and you receive all of the other policy and your injuries are greater than the other policy's limits. In this case it does not apply since the policies are for the same amount.
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Under these facts, underinsurance coverage is triggered only if the liability policy limits of the tortfeasor (the driver/car at fault) (you in this case) are less than the liability limits of car #2. Since the policy limits are the same there is no underinsurance (sometimes called "gap" insurance) coverage available, period. (If driver number had a liability policy greater than your liability coverage AND he/she purchased underinsurance coverage (e.g., 50K) then after receiving the full amount of your (the tortfeasor's) coverage, she could try to get the difference between your liability coverage (25k) and the amount of underinsurance she purchased (50K)--meaning she get try to get an additional 25K from her own insurer.
Under your facts underinsurance does not apply. You can be sued without regards to any underinsurance. I hope that is clear.