What Is an Insurance Guaranty and How It Can Help Maryland Accident Victims Recover for Their Injuries?

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.

The Facts

The plaintiff was killed when a set of tires came loose off of a passing semi-truck, collided with his vehicle, and caused him to lose control. The plaintiff’s vehicle crossed into oncoming traffic and crashed head-on into another passing truck. The plaintiff’s estate filed a personal injury case against several of the parties involved, including the company that serviced the tires that came loose.

The plaintiff settled the case for $800,000 against all of the parties and was able to obtain about $377,000 in compensation. However, the insurance company for one of the defendants became insolvent during the pendency of the plaintiff’s claim, leaving the plaintiff without the ability to collect the total damages award she was owed. The state guaranty stepped into the shoes of the insurance company. Like Maryland, the state where the accident occurred had maximum guaranty coverage of $300,000 per life.

The guaranty argued that the $377,000 that the plaintiff recovered should be subtracted from the $300,000 maximum benefit, meaning that the guaranty did not owe the plaintiff any additional compensation. The plaintiff argued that the $377,000 should be subtracted from her total damages amount of $800,000, providing the policy maximum of $300,000 in coverage.

Ultimately, the court ruled in the plaintiff’s favor, finding that lawmakers would not have designed a statute which would provide guaranty limits that, in practice, would not provide meaningful assistance in the event of a serious or fatal accident.

Have You Been Injured in a Maryland Truck Accident?

If you or a loved one has recently been injured in a Maryland truck accident, you may be entitled to monetary compensation. The dedicated Maryland truck accident attorneys at the law firm of Lebowitz & Mzhen, LLC have extensive experience representing injury victims in all types of personal injury claims, including Maryland truck accidents. To learn more, call 410-654-3600 to schedule a free consultation today.

More Blog Posts:

Wrongful Death Claims Following Fatal Maryland Truck Accidents, Maryland Trucking Accident Lawyer Blog, published September 26, 2018.

Liability in Maryland School Bus Accidents, Maryland Trucking Accident Lawyer Blog, published October 3, 2018.

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