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New Maryland Law for Enhanced Uninsured Motorist Coverage

Maryland drivers should be aware of a law that took effect for personal auto policies purchased on or after July 1, 2018. In order to expand protection for drivers who are injured by uninsured or underinsured motorists, insurers issuing new policies are now required to offer enhanced underinsured motorist (EUIM) coverage to replace traditional underinsured motorist (UM) coverage.

What’s the difference? EUIM coverage prohibits a carrier from reducing the coverage amount by any applicable liability insurance paid on behalf of a liable third party. EUIM essentially allows a claimant to “stack” an EUIM payment on top of a payment received from a third party’s liability policy, with no offset.

To illustrate, suppose Driver A, whose policy contained underinsured motorist (UIM) coverage of $200,000, was struck and seriously injured by Driver B, a motorist with a $100,000 liability limit. With standard UM coverage, Driver B’s coverage amount ($100,000) would be deducted from Driver A’s limit ($200,000) for a maximum payment of $100,000. EUIM coverage would allow Driver A to stack both full amounts with no offset for a total payment of $300,000.

Note that the new law requires insurers to offer EUIM coverage, but does not make acceptance of the coverage mandatory: drivers may still opt for traditional UM coverage and its offsets. Further, the new law applies to private passenger motor vehicle liability policies (including motorcycles); the EUIM offer is not required for commercial policies.

Questions about EUIM coverage or other auto insurance issues? Contact Consolidated Insurance.