There’s just one problem.
The secret is something that shouldn’t be a secret: It’s Oregon’s new auto insurance “stacking” law and the fast-approaching January 2 date when the law takes effect for all newly issued or renewed auto insurance policies.
Stacking is news that the division should be sharing with every Oregon driver in as many media as possible, from shouting from the rooftops to announcements on the radio and public access TV, legislator mailing lists, and — of course – on the division’s own website and press releases.
Why is it so important to get the news out to Oregonians about stacking? Because the stacking law – which fixes a giant snafu in Oregon insurance policies – only applies prospectively, meaning that all the existing policies in force on January 2 still operate under the old rules. And the old rules were a gigantic ripoff because they let insurance companies charge drivers for under-insured motorists coverage but not pay for claims.
Even more bizarre, the old law (which applies to your policy right now and will continue to apply until you renew your policy, after January 1) actually allows insurance companies to deduct from your under-insured motorists’ coverage the amount of liability coverage carried by the at-fault driver who hit you.
Here’s how the change was explained by Schauermann Thayer Jacobs Staples & Edwards, a law firm based in Vancouver, Washington, where stacking has long been the rule:
Victor purchases both $25,000 in liability insurance and $25,000 in UIM insurance from Insurance Company A. He pays a separate amount for each of these coverages. Carl purchases $25,000 in liability insurance from Insurance Company B.
One day Carl isn’t paying attention to the roadway, runs a red light, and T-bones Victor who is driving to work. Victor suffers serious injuries in the collision and is rushed by ambulance to the hospital where he is admitted and spends several days recovering from his injuries. His medical bills exceed $50,000 (given the high cost of medical care, his medical bills likely exceed $100,000). Insurance Company B pays the first $25,000 of Victor’s medical bills. To highlight the differences between the old law and the new law, the story would continue as follows:
Before SB 411 Because Victor’s UIM insurance does not “stack”, his UIM coverage is reduced by Carl’s liability limits. So the $25,000 in UIM coverage is reduced by $25,000 in liability coverage—for a net total of $0. Victor is only able to recover $25,000, even though he paid a premium to his insurance company to receive $25,000 in UIM benefits.
After SB 411 Because Victor’s UIM insurance “stacks” on top of Carl’s liability insurance, Victor receives not only the $25,000 available from Carl’s liability insurer, but an additional $25,000 in UIM benefits—he receives the UIM benefit associated with the premium he paid. Victor is able to recover a total of $50,000.
As mentioned, SB 411, affords Oregon drivers the same protection as Washington drivers who are unfortunate enough to have been injured by an under-insured driver. Given the unique geographical location of our office, literally a stone’s throw away from the border of Washington and Oregon, we have seen the significant difference in the recoveries we obtain for our Washington clients compared to our Oregon clients. The Oregon insurance scheme was not fair and resulted in additional harm to Oregon insureds.
That twist is why consumer advocates – which, presumably, ought to include Oregon’s Insurance Division – are working overtime to spread the word to Oregonians that they need to contact their insurance agents or carriers to make sure that their policy is renewed early so that it can be re-issued with a January 2 effective date, so that the improved stacking coverage applies and the anti-stacking ripoff stops.