Now that we are a year into the new legislation that was designed to fix the Vega problem, everything related to UM and UIM claims has become clear, right?  Wrong.  What is clear is that, if your policy provides for the new statutory procedures and it has been issued or renewed since the effective date of the 1997 legislation, the new rules will apply to new claims and some amount of common sense will attach to the analysis and application of statutory and policy requirements with respect to both UM and UIM claims. 

     Even though the accident may have happened after the effective date of the legislation, the initial questions when faced with a UM or UIM claim these days relate to what law applies.  Is it the old law or the new law?  Does the insured have a Vega claim, that can be made even before the liability claim is resolved?  Will the claim be governed by the policy or the statute? The answers to these questions will depend on an analysis of the policy in question, when it was issued or renewed, and how the policy language compares with the statute.  Generally speaking, the insured will get the benefit of the statute or the policy, which ever is more favorable to the insured.

     The question of whether the claim in question falls under the "old" law or the "new" law will depend upon whether the policy you are dealing with was either issued or renewed on or after the effective date of the new legislation (which was either 10/3/97 or 10/4/97, depending upon who is counting the number of days after the end of the legislative session).  If the policy was not issued or renewed since then, you are under the old law, which makes a Vega type claim still available, and the insured can bring his UM or UIM claim whenever he wants--whether or not he has collected the underlying liability limit, or has even started negotiating with the liability insurer. 

     If you find that the UIM claim you are dealing with falls under the new law, the first thing you should do is to decide whether or not there is even a potential for UIM benefits.  Under the new law, unless the UIM policy limit exceeds the liability limit of the at fault driver, the UIM policy should not even come into play.  That assumes, of course, that the policy tracks the statute in this respect.  Under the old statute, because of Vega, there were arguments that even a UM/UIM policy with limits less than a liability limit would give rise to a UIM  claim, but those cases will soon be gone.            

     If you find that the policy has been issued or renewed since the effective date of the new legislation, you also  need to compare the policy language with the statutory language.  As noted earlier, the insured will get the benefit of the policy or the statute, which ever is more favorable to him.  If the policy does track the statute precisely (and it is best to not take anyone's word for this, or for whether it was "supposed to" track--you should do the comparison yourself or ask your defense counsel to do it for you), then the following rules apply:

1.         The insured must deal with the liability insurer before making a UIM claim--Vega no longer applies. 

2.         The insured must either have obtained a policy limit offer and asked you to consent to his accepting it or have obtained a less than policy limit offer, asked you to consent to accepting it, and agreed that you will get credit against the UIM limit for the entire liability limit as if it had been paid. 

3.         If you do not consent to the liability settlement, the insured is entitled to make his UIM claim anyway, and you do not get credit for the liability limit or any part of it. 

4.         You only have 30 days from your receipt of a written request for consent to decide if you want to consent to the liability settlement.  If you do not respond, the law presumes that you have consented.

     When you are asked to consent to a liability settlement, the factors you should have in mind are precisely the same as those which should be considered by the insured's attorney who is thinking about accepting a liability settlement when there is no potential of a UIM claim.  In other words, if you realistically think you can collect subrogation from the liability insured, beyond the liability limit, you may want to withhold consent.  Keep in mind, however, that collecting that subrogation will not be easy, or inexpensive.  This is a decision that should not be made lightly.  There are transaction costs associated with pursuing subrogation, and success is never guaranteed.  There are times when the possibility of collecting subrogation is best not pursued, because of the costs, the uncertainties of success, and perhaps less than complete cooperation from the insured once he has been paid his UIM benefits.