Section 6.33 Exhaustion Clause

• Library: Insurance Practice 2015

UIM policies have in big, bold print something along the lines of:

THERE IS NO COVERAGE UNTIL THE LIMITS OF LIABILITY OF ALL BODILY INJURY LIABILITY BONDS AND POLICIES THAT APPLY HAVE BEEN USED UP BY PAYMENT OF JUDGMENT OR SETTLEMENTS.

These are commonly called “Exhaustion Clauses.” An insured must obtain the full policy of the underinsured motorist before proceeding against the underinsured motor carrier unless the insured has the consent of the carrier to do otherwise. See §6.34, infra.

Because of the...