MARYLAND CLIENT ADVISORY: Maryland Converts Enhanced Underinsured Motorist Coverage From Opt-in to Opt-out

On May 8, 2023, Maryland’s Governor approved House Bill 128.  For private passenger vehicle insurance policies, the Bill converts enhanced underinsured motorist coverage (“EUIM”) from opt-in coverage to opt-out coverage.

By way of background, Maryland first enacted optional EUIM coverage during its 2017 legislative session.  The law applied to private passenger vehicle policies dated July 1, 2018, as well as polices subsequent to that date.  Prior to 2017, insurance companies were only required to offer standard UM/UIM coverage.  Under the standard design, an injured driver could only recover UM/UIM coverage under their own insurance policy, less the at-fault driver’s liability coverage.  With EUIM coverage, an injured driver, depending on the extent of his/her injuries, could recover the entire UM/UIM coverage plus the at-fault driver’s liability coverage.  Thus, EUIM coverage allows insureds to stack their recovery.

Under the 2017 legislation enacting optional EUIM coverage, private passenger vehicle insureds were able to opt-in for the enhanced coverage.  The 2023 legislation will now require all new private passenger vehicle policies, issued on or after July 1, 2024, to provide EUIM coverage unless the insureds opt-out.  If an insured does not wish to obtain EUIM coverage, the insured must make a written statement waiving the coverage.  The waiver must be made on a form approved by the Commissioner, and the form can be included as part of the insurance contract.  However, the form must state: (1) the scope of EUIM coverage that would be provided under the policy; (2) that the insurer must provide EUIM coverage if the insured fails to waive the coverage; (3) that the insurer cannot refuse to underwrite an individual for refusing to waive EUIM coverage; and (4) the waiver must be an affirmative written waiver.

Currently, the Maryland Insurance Administration is evaluating comments regarding the new selection form for UM/UIM coverage.  The proposed form can be found here.  The bill also requires the Maryland Insurance Administration to complete a study on the impact of converting EUIM coverage from opt-in to opt-out.  That study must be completed by December 31, 2028.

Thomas, Thomas & Hafer, LLP (“TT&H”) is a law firm with over 90 lawyers in a dozen offices throughout the Mid-Atlantic region.  Since 1977, TT&H has serviced the insurance industry.  Madeline Creps is an associate in TT&H’s Washington, DC office.  Questions about these developments can be directed to Madeline at (202) 978-2049 or mcreps@tthlaw.com.