Maryland Court of Appeals Upholds “Gap” Insurance Policy in Pedestrian Accident Case

The Maryland Court of Appeals interpreted the “gap” provision of an auto insurance policy in Connors v. Government Employees Ins. Co., 442 Md. 466 (2015). In Connors, the plaintiff and her husband were walking in their neighborhood when they were struck by a vehicle backing out of a driveway. The plaintiff and her husband suffered serious injuries as a result of the accident, and her husband eventually died from his injuries.need-an-ambulance-1512594-639x417

The terms of the GEICO insurance policy of the plaintiff and her husband included underinsured motorist coverage of $300,000 per person and $300,000 per accident. The driver’s auto insurance policy was limited to $100,000 per person and $300,000 per accident. However, the amount of damages of the plaintiff and her husband exceeded all available insurance. The plaintiff settled with the driver’s insurance company for the limits of the driver’s liability insurance, paying $100,000 to the plaintiff and $100,000 to her husband before he died. The plaintiff then submitted claims for underinsured motorist coverage to GEICO under their own insurance policy, seeking $300,000 total. GEICO agreed that the plaintiff was owed an additional $100,000 under the terms of her policy, but they were in dispute as to the additional $200,000. The plaintiff subsequently brought an action for a declaratory judgment against GEICO regarding the payment of the $200,000 in underinsured motorist coverage benefits.

In Maryland, underinsured motorist coverage is designed to provide an injured insured with resources equal to those that would have been available had the tortfeasor carried liability coverage equal to the amount of uninsured motorist coverage that the injured insured purchased from her own insurance company. Maryland is therefore a “gap theory” state, meaning that an injured insured may recover the difference between their underinsured motorist coverage and the money received from the tortfeasor.

In Connors, the Maryland Court of Appeals ultimately found that the plaintiff’s GEICO policy was not ambiguous, and it enforced the terms as a matter of law. The court did not agree with the plaintiff’s argument that the $300,000 coverage amount was meant for each person resulting from one accident, totaling $600,000. Instead, under the terms of the plaintiff’s GEICO policy, the $300,000 per accident limit was the starting point. The total amount paid by the driver’s insurer ($200,000) was subtracted from the $300,000. The remaining $100,000 owed to the plaintiff was intended to fill the gap between what the plaintiff and her husband would have recovered from the driver had the driver maintained identical coverage to that purchased by the plaintiff and her husband. Since the plaintiff and her husband may recover no more than $300,000 together, the Maryland Court of Appeals ruled that GEICO was only responsible for paying $100,000.

The Maryland attorneys at Foran & Foran, P.A. represent accident victims in personal injury cases, including car accidents, medical malpractice, workers’ compensation, and others.  If you or a loved one has been injured due to the negligence of another person, you may discuss your legal options with one of our experienced attorneys by calling (301) 441-2022 or contacting us online.

More Blog Posts:

Maryland Court Rules in Favor of Insurance Company in Car Accident Settlement Case, Maryland Personal Injury Blog, published July 30, 2015

Maryland Auto Insurance Policy Lapses Day Before Fatal Accident; Court Provides No Relief to Driver, Maryland Personal Injury Blog, published October 6, 2015