In Maryland, car insurance is mandatory. All motorists must obtain must obtain at least personal injury protection for $30,000 per person and $60,000 per accident. Also, motorists must purchase at least $15,000 in property damage insurance.
Typically, when a motorist is involved in an accident with another motorist, the injured motorist will file a claim with the at-fault motorist’s insurance company. If the claim is approved, the insurance company will cover the costs of the accident victim’s injuries up to the policy limit. However, insurance companies, like other businesses, are subject to numerous internal and external economic pressures. And occasionally, insurance companies become insolvent, meaning they are unable to pay out on the policyholders’ claims.
Each state has set up an insurance guaranty fund to provide motorists with some protection if an insurance company goes out of business or is otherwise insolvent. Under Maryland law, the guaranty fund provides up to $300,000 in coverage per person. If a plaintiff can obtain some compensation for their injuries, but an insolvent insurance company cannot completely fulfill an accident victim’s claim, the plaintiff total recovery amount will be the difference between their actual damages and the guaranty limit. A recent case illustrates how courts may use a plaintiff’s actual recovery to offset their total available compensation under the guaranty fund.