Underinsured And Liability On Same Policy – How Does It Work

Whether you live in Weatherford, Texas, Grand Prairie, Arlington, Mansfield, Dallas, or Fort Worth, the answer to the above would be the same. Texas insurance law is going to apply to all residents of Texas, no matter where in the state they live.
Of course there is no one answer to the above title. The answer depends on the policy and the fact situation. A case decided in 1992, gives some insight into a scenario that is fairly common across the state.
The case, Margot Bergensen v. Hartford Insurance Company of the Midwest and Harry Bergensen, was decided by the 1st Court of Appeals in Houston, Texas. Here are the relevant facts.
Hartford Insurance Company of the Midwest (Hartford) issued a policy to the Bergensen’s that was in effect for the relevant period of time. The policy provided liability coverage of $100,000 and underinsured coverage. Margot Bergensen (Margot) was severly injured in an accident in her covered automobile that was driven by her husband, Harry Bergensen (Harry). Harry was at fault and Hartford paid Margot $100,000 under the liability portion of the policy. Margot then made a claim against Hartford for coverage through the underinsured portion of the insurance policy with Hartford and Hartford denied the claim for the underinsured benefits.
The relevant portions of the policy, which are the same in most but not all policies of insurance in Texas, read as follows:

We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by a covered person, or property damage, caused by an accident. The owner’s or operator’s liability for these damages must arise out of the ownership, maintenance or use of the uninsured motor vehicle.

“Covered person” as used in this Part means: 1. You or any family member:
“Uninsured motor vehicle” means a land or motor vehicle…
4. Which is an underinsured motor vehicle. An underinsured motor vehicle is one to which a liability bond or policy applies but its limit of liability:
a. is less than the limit of liability for this coverage; or b. has been reduced by payment of claims to an amount less than the limit of liability for this coverage.
However, “uninsured motor vehicle” does not include any vehicle…
1. Owned by or furnished or available for the regular use of you or any family member.

The “does not include” language two lines above here is relevant. The court in its opinion stated, “The underinsured motorist provision of the contract explicitly states that it does not apply to vehicles “owned or furnished or available for the regular use of you or any family member.”
The court went on to say that “the negligence of others” language in the insurance policy refers to the negligence of persons who are “not” members of the policyholder’s family, and so, does not apply to her husband, Harry.
The court in conclusion said that the Bergensens contracted with Hartford for a policy which provided a maximum of $100,000 in liability coverage. The underinsured portion of the policy was intended to protect the Bergensens from “other” motorists who failed to have adequate coverage “on their vehicles”, not to protect the Bergensens from their own failure to maintain adequate liability coverage.
This case is still good law and has been cited as authority in two Fort Worth Court of Appeals cases. One on 12-18-08 and another on 7-30-09. The Houston Court of Appeals in Houston cited it again on 4-17-08.
There are exceptions to the ruling in these cases. An experienced Insurance Law Attorney would be able to look at the facts in a case and apply the current law and give a good opinion as to what should be done any particular case.