The Vermont Legislature's House Commerce Committee isconsidering a bill, H 79 that would change the definition ofunderinsured motorist coverage.

The American Insurance Association urged the committee to rejectthe bill. “The Department of Banking, Insurance, Securities, andHealth Care Administration studied coverage issues raised by H 79in a report to the legislature dated Jan. 15, 2004,” said LauraKersey, AIA assistant vice president, northeast region. “Thedepartment concluded that this legislation was likely to result inan increase in automobile insurance premiums in Vermont.”

Under the terms of the current act, a vehicle is underinsured ifits personal injury limits of liability are less than the limits ofuninsured motorists coverage applicable to any injured partylegally entitled to recover damages.

The bill being proposed would change that language to read:

1. The liability insurance limits applicable at the time of theaccident are lower than the limits of the underinsured motoristcoverage applicable to the insured; or
2. The available liability insurance has been reduced by paymentsto others injured in the accident to an amount less than the limitsof the underinsured motorist coverage applicable to theinsured.

Last year, Gov. James Douglas vetoed a similar bill that wasintended to address a 2003 Vermont Supreme Court ruling. In thatcase, Colwell v. Allstate, the court had held that an at-faultdriver's vehicle is not underinsured when the driver's liabilitylimits are equal to or greater than the claimant's UM/UIM limits,even if the UM/UIM claimant receives something less than his UM/UIMlimits from the driver due to coverage exhaustion by multipleliability claimants.