Q: At the time of a loss, are the governing uninsured/underinsured motorist limits a function of the state of the accident, or the state in which the vehicle is registered?

A: UM/UIM coverage is generally a function of the state in which coverage is purchased and provided. Usually, state laws that regulate UM/UIM coverage apply only to vehicles registered in that specific state and do not extend to vehicles registered in another state.

Likewise, no policy provisions related to UM/UIM coverage extend coverage to states in which UM/UIM coverage is required—such as those that exist for liability coverage in regards to limits.

Only the state of registration applies to whether coverage exists; the written policy governs the limits that apply. Regardless, UM/UIM coverage is highly recommended, even in states that do not statutorily require it.

Q: An exclusion in the uninsured/underinsured motorist policy reads: "This insurance does not apply to…the direct or indirect benefit of any insurer or self-insurer under workers compensation, disability benefits or similar law.”

If an officer of a business chooses to exclude themselves from the workers comp policy, would they be protected by the UM/UIM coverage?

A: Since you didn’t provide the policy form in question, this answer is based on the ISO form CA 21 12 03 06.

“Direct benefits” could include indemnity payments and other money directly paid to the injured party. “Indirect benefits” could include medical payments to doctors and other payments made to third parties. 

The exclusionary wording applies only to direct and indirect benefits actually received when the individual is eligible for workers comp coverage. When an individual lawfully excludes themselves from workers comp, that person is, theoretically, no longer subject to the law. This precludes them from any benefits, direct or indirect, so they would thus be eligible for protection under the UM/UIM coverage. 

The exclusionary wording is intended to prevent duplication of payment under the two coverages.

Chris Boggs is executive director of the Big “I” Virtual University (VU).

These questions were originally submitted by agents through the VU’s Ask an Expert Service. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.