The Red-Light Collision: Splitting Maine Minimum Limits
Mark, a Portland resident, insures his sedan under a personal auto policy written at Maine's minimum financial responsibility limits: $50,000 per person / $100,000 per accident bodily injury and $25,000 per accident property damage, with a $500 collision deductible and uninsured motorist coverage at the same limits (no written rejection on file). His 19-year-old daughter Ava is a resident relative and an insured driver on the policy. Driving to a paid babysitting job, Ava ran a red light and struck two pedestrians. Their documented damages are $80,000 (Pedestrian 1) and $45,000 (Pedestrian 2). The car, actual cash value $9,000, is a total loss. Both pedestrians have retained counsel.
1. How much will Mark's policy pay to each pedestrian, and what happens to the rest?
Read the worked answer
Apply the per-person limit first, then test the per-accident ceiling.
| Claimant | Damages | Payable |
|---|---|---|
| Pedestrian 1 | $80,000 | $50,000 (per-person limit) |
| Pedestrian 2 | $45,000 | $45,000 (within remaining per-accident room) |
| Total | $125,000 | $95,000 (under the $100,000 per-accident cap) |
The per-accident limit is not reached, so Pedestrian 2 is paid in full. Pedestrian 1 collects $50,000 and carries $30,000 of uncompensated loss - a personal judgment against Ava, and potentially against Mark on an owner-liability or negligent-entrustment theory if the facts support it.
Two points an adjuster must state clearly:
- The limits are per occurrence; the policy does not pay the $125,000 simply because that is the total damage.
- Do not simply split the $100,000 evenly. The per-person cap governs each claimant, and the per-accident cap only constrains the total.
Property damage to the two pedestrians' property is separately capped at $25,000 per accident; the facts here show no PD claim.
2. Ava's car is a total loss. How is the physical damage handled, and does the liability claim affect it?
Read the worked answer
Collision coverage is a separate grant and is unaffected by the liability payments, except that both draw on the same policy and some limits are shared.
- Payment = actual cash value − $500 deductible = $9,000 − $500 = $8,500
- ACV, not replacement cost: the settlement reflects the vehicle's pre-loss market value (year, mileage, condition, options, local comparables), not what it would cost to buy a new car.
- If Mark had a loan balance above $8,500, there is no gap coverage unless loan/lease coverage was purchased - a common complaint after a total loss.
- Subrogation: if either pedestrian's negligence contributed, the carrier may pursue recovery after paying; Ava's own recovery would be reduced by comparative fault under Maine's modified comparative fault rule.
Do not overlook the uninsured motorist grant. It does not respond here (the at-fault driver is Ava, an insured), but the file should confirm the coverage status. Maine requires UM coverage at limits equal to the liability limits unless the named insured rejects it in writing; there is no written rejection on this policy, so the UM limits must match $50,000/$100,000. If the declarations page showed lower UM limits, that is an underwriting error requiring correction.
3. The claim settles, and Mark asks whether his limits are adequate. What analysis do you present, using a change in the facts?
Read the worked answer
Re-run the numbers with more serious injuries to show the exposure. Assume Pedestrian 1 has $90,000 in damages and Pedestrian 2 has $70,000 - total $160,000:
- Pedestrian 1: $90,000 claim → $50,000 (per-person cap)
- Pedestrian 2: $70,000 claim → $50,000 (the per-accident cap is $100,000; only $50,000 remains)
- Uninsured exposure: $60,000, plus defense of two lawsuits
Recommendations:
- Raise liability limits well above the Maine minimum. The minimums exist to satisfy the financial responsibility law, not to protect a household's assets; $250,000/$500,000 is a realistic starting point.
- Add a personal umbrella once auto and homeowners liability limits are raised to the carrier's underlying requirement - the umbrella is usually inexpensive relative to the limit and responds to exactly this shortfall.
- Keep UM/UIM at the new liability limits. Maine requires UM at liability limits absent a written rejection; buying higher liability limits and leaving UM at the old level leaves Ava and her passengers unprotected against uninsured and underinsured drivers.
- Address the young-driver exposure explicitly - list Ava as a rated driver, and discuss whether she should have her own policy if she takes the car to school.
Document the conversation with a signed coverage-declination form if Mark declines the increase; undisclosed adequacy advice is an E&O claim waiting to happen.