Every lawyer who represents motor-vehicle accident victims likely determines whether potential clients and/or their resident relatives have uninsured and underinsured motorist coverage. Often enough, this coverage makes all the difference: allowing lawyers to add real value to the services we provide. This is equally true when motor-vehicle accident victims have been injured while driving in the course and scope of their employment.

Everyone who drives a motor vehicle in conjunction with their job – even those who do not drive for a living, full-time – is at increased risk of being involved in an automobile accident. From police officers and firefighters to delivery drivers and realtors, the risk of serious injury increases in direct proportion to the amount of time an employee spends driving while at work. Aside from the increased risk of being involved in a serious car crash, Colorado’s low liability limits compound risk by allowing woefully underinsured drivers on Colorado’s highways and roads. Worse, drivers who can’t afford liability coverage (and those who simply choose to ignore the law) drive without insurance of any type. Uninsured drivers are also becoming increasingly common.

Despite facing these risks, many employees are unaware that the UM/UIM coverage on the vehicles they and their resident relatives own is applicable to work-related motor-vehicle accidents. For that reason, UM/UIM coverage is essential when anyone drives a motor vehicle for private purposes and equally essential for those who drive while working. Always investigate a client’s coverage and always encourage clients to obtain UM/UIM coverage sufficient to meet the financial hardships visited upon them by uninsured and underinsured drivers.

PRACTICE POINTER: If the employer purchased UM coverage on the vehicle driven by the injured employee, the employee can also seek UM benefits from the employer, in addition to workers’ compensation benefits. See Klabon v. Travelers Prop. Cas. Co. of Am., 2024 CO 66, ¶41 (an employee injured in the course of their employment by the acts of an uninsured or underinsured third-party tortfeasor, who receives workers’ compensation benefits, is not barred under section 8-41-102 from also bringing suit against their employer’s UM/UIM insurance).

For Those Who Drive While Working, UM/UIM Coverage Is Necessary Because Workers’ Compensation, Alone Is Not Enough

When someone is injured in a motor-vehicle accident while working, their employer’s workers’ compensation carrier offers some protection. Workers’ compensation provides primary coverage, including medical treatment, wage loss and other benefits for all work-related injuries, including car crashes. Moreover, workers’ compensation coverage applies to work-related motor-vehicle accidents regardless of fault. Workers’ compensation applies, that is, even when the injured worker is at fault for the accident that caused his or her injuries.

In cases where the injured worker is not at fault and a third party causes the incident, workers’ compensation usually will not provide benefits for all the physical and financial damages the injured worker sustains. That’s because workers’ compensation does not cover losses – such as pain and suffering or loss of enjoyment of life – that can only be recovered from negligent drivers who cause injuries. Moreover, wage loss benefits in the workers’ compensation system are limited to 2/3 of the injured worker’s average weekly wage. Wage loss benefits in the workers’ compensation system, however, are also subject to maximum weekly caps, leaving high earners subject to losses in excess of the “1/3” that is not reimbursed. The balance can only be recovered when the negligent driver has ample liability coverage or the injured worker has obtained UM/UIM coverage to protect themselves and their family. For example, the current weekly cap on wage loss benefits in the workers compensation system is $1,396.85. An accident victim who is hurt at work and earns roughly $2,100.00 per week would thus recover roughly 2/3 of their actual average weekly wage (i.e. $1400). If weekly workers’ compensation wage loss benefits were not capped, however, someone earning $2,500.00 per week would also recover 2/3 of their average weekly earnings, or $1,666.66. But because weekly wage loss benefits are capped, the more the accident victim earns, the more he or she may lose overall. In short, the higher the earnings, the greater the loss. Ample UM/UIM coverage can help cover the wage loss gap. There are also cumulative indemnity caps in the workers compensation system that can impede full recovery.

Negligent Uninsured Drivers

In most cases, of course, it is impossible to recover money from uninsured drivers. Drivers with assets usually obtain at least minimum liability limits to protect those assets from claims brought against them by their injured victims. When clients have adequate levels of UM/UIM coverage, however, and are injured by an uninsured driver, you can help them file an uninsured motorist claim with the insurance company covering the motor-vehicles your client or your client’s resident relatives own. (NOTE: The term “motor-vehicle” can include cars, trucks, motorcycles, and some other conveyances. The term “resident-relative” is itself a complicated area of the law and should be researched and understood, as it may extend to dual households and unique circumstances.)

PRACTICE POINTER: Colorado’s legislature deems adequate UM/UIM coverage so important that it can only be rejected in writing. If a client or prospective client indicates they don’t have UM/UIM coverage, find out whether it was properly rejected. See C.R.S. § 10-4-609 (1)(a).

PRACTICE POINTER: UM coverage applies to all accidents caused by the negligence of a third-party, even when those accidents happen while the client was driving for work. Depending on the circumstances, your client can obtain workers’ compensation coverage and file an uninsured motorist claim to obtain compensation for damages that workers’ compensation doesn’t cover.

Negligent Underinsured Drivers

The payment of workers compensation benefits gives workers’ compensation carriers – and employers who are self-insured for workers’ compensation – a right of subrogation fully protected by statute. In simple terms, this right of subrogation gives the workers’ compensation carrier the right to sue the negligent or reckless driver – and other potentially liable parties — who caused the injuries giving rise to the workers’ compensation claim. When workers compensation carriers assert their right of subrogation, their rights are generally equal to the dollar amount of medical and indemnity benefits they pay.

A workers’ compensation carrier’s right of subrogation is fully protected and enforceable by law. Ignoring a subrogated carrier’s rights can imperil an injured workers right of recovery. Subrogation rights and limitations – as well as the procedures governing it’s execution — are set out in C.R.S. section 8-41-203 and trigger obligations on the part of insureds and their attorneys. While a deep dive into subrogation law is beyond the scope of this article, suffice to say, it should not be ignored or evaded. Open, frank communication usually leads to the best result when negotiating workers’ compensation subrogation liens.

PRACTICE POINTER: Various Notice provisions are obligatory and penalties for failure to abide by them can be severe. See C.R.S. § 8-41-203.

Fortunately, the subrogated insurer’s rights essentially mirror those of the injured employee and are subject to the same limitations as the injured employee. For example, the injured employees’ percentage of fault has a direct and equal impact on the subrogated carrier’s rights. Workers’ compensation carriers can choose to let the injured party pursue claims against the responsible parties or can join in litigation. In short, every decision can have a significant impact on your client’s recovery.

In a case where the total liability coverage is less than the injured party’s damages, the responsible party is underinsured and an underinsured motorist claim can be filed with UM/UIM carrier covering your client’s – or his resident relatives — insurance company. In these cases where the amount of liability coverage is too low to cover both the crash victim’s personal injury damages and the financial losses “suffered” by the workers’ compensation carrier, the workers’ compensation carrier and the personal injury party’s attorney must negotiate a resolution of the limited liability proceeds. If negotiations fail on how to apportion the limited liability proceeds, a Jorgensen hearing can be held, where a district court judge will determine the division of the proceeds. See Colorado Compensation Ins. Authority v. Jorgensen, 992 P.2d 1156 (Colo. 2000).

UM/UIM Coverage Is Exempt From Subrogation

When dealing with automobile insurance, it is important to note that the workers’ compensation carrier has a right of subrogation that applies against the responsible driver’s liability coverage only. Workers’ compensation carriers have no legal right to collect any money from the UM/UIM policies applicable to car accidents. See Colorado Ins. Guaranty Assoc. v. Menor, 166 P.3d 205, 213 (Colo. App. 2007). Finally, insurance companies can’t cancel UM/UIM policies or increase rates just because a claim was filed. See C.R.S. section 10-4-628.

Examples

(1)    While driving for work, your client gets hit by a drunk driver who is uninsured. Primary coverage for the injuries will be provided by the employers’ workers’ compensation carrier.  Without UM/UIM coverage, the injured employee will receive only the limited compensation available through the workers’ compensation system and remain subject to its limitations, regulations, and rules. No matter how severe the injuries, they will never recover any compensation for pain and suffering, loss of enjoyment of life, or many of the other damages available in personal injury claims. With proper UM/UIM coverage in place to protect the injured party and his or her family, an uninsured motorist claim can be filed, allowing the client to collect compensation up to the coverage limits.

(2)    While driving for work, your client is hurt in a car accident caused by a negligent driver with $25,000.00 in liability limits. Again, primary coverage for the injuries will be provided by the employers’ workers’ compensation carrier or the self-insured employer. Assume here that the client suffered significant physical and financial losses and the workers’ compensation carrier was forced to spend $60,000.00 on the workers’ compensation claim. The negligent driver with just $25,000.00 in liability coverage is thus truly underinsured. While the workers’ compensation carrier usually cannot claim every penny of the available liability coverage, subrogated workers’ compensation carriers often recover the lion’s share of available liability coverage where liability limits are low, and payments made by the workers’ compensation carrier are far in excess of liability coverage. If the client has obtained adequate UM/UIM coverage to protect themselves and their family, an underinsured motorist claim can be filed and additional money recovered up to the limits of coverage. The workers’ compensation carrier has no subrogation rights against the UM/UIM coverage.

Checklist Of Questions

It’s always helpful to have a checklist of questions on intake forms. Consider these:

• Was the injured party working at the time of the accident? If so, has a workers’ compensation claim been filed and who is the workers compensation carrier?
• Did the responsible driver have liability coverage? If so, who insured the responsible party and what are the limits?
• Are there any other potentially liable third parties?
• Did the injured party have UM/UIM coverage on any motor-vehicles they own? If so, who insured the victim and what are the coverage limits?
• If the injured party does not have UM/UIM coverage in place, was it rejected in writing?
• Does the injured party have any potential resident relatives with applicable UM/UIM coverage?
• Does the employer have UM/UIM coverage on the subject vehicle?

Summary

Adequate uninsured and underinsured motorist coverage is an ideal and relatively inexpensive way to obtain additional, essential benefits. What is adequate, of course, depends on the individual insured’s needs. Regardless, UM/UIM coverage of some level is essential. UM/UIM coverage protects drivers and their families from the potentially catastrophic losses caused by uninsured and underinsured drivers. UM/UIM coverage protects insureds who drive while working and it covers those drivers even when they are driving a motor vehicle owned by their employer. For example, police officers driving in a patrol cars are covered by the UM/UIM coverage they and their resident relatives obtain on the vehicle(s) they own. UM/UIM insurance dovetails nicely with workers’ compensation coverage and UM/UIM can fill the gaps left open by the damage limitations in the workers’ compensation scheme. Most importantly, the workers’ compensation carrier has no rights of subrogation against UM/UIM coverage, so there is no apportionment of proceeds; whereas, liability coverage from the at-fault party must be shared between the injured party and the workers’ compensation carrier.