What is an Unsatisfied Judgment Fund?

As the world around us continues to evolve so does our understanding of insurance and how we can improve it to protect all individuals. In this spirit many state insurance departments across the country have started to form "unsatisfied judgment funds" to assist with people who may not have been reimbursed appropriately after a claim. This fund is not to provide money to people who were unsatisfied with their settlement, rather to people who's judgment amount was never satisfied.

The AICPCU (American Institute for Chartered Property Casualty Underwriters) define the term "Unsatisfied Judgment Fund" as follows: "A fund designed to provide a source of recovery for victims of motor vehicle accidents when an at-fault motorist is unable to pay any judgment." This is a relatively new idea and makes common sense when determining how to protect the public against major financial losses due to uninsured or underinsured drivers. Here are a few things you should know about the unsatisfied judgment fund and its requirements:

1. The injured person in an auto accident can only recover from the unsatisfied judgment fund after they have proven two important things: First, the other driver has to be proven negligent, or to have caused, the accident in question. Second, the victim must prove that the responsible party is unable to pay for the costs of the damages that he or she caused. This is possible by providing a denial letter or something similar from the responsible party's insurer.

2. The amount that the victim can recover from the unsatisfied judgment fund is only available up to the state's compulsory insurance law. In other words, if your state requires you to carry $25,000 in bodily injury liability coverage you are able to recover up to that amount. However, that amount can be reduced by the amount of money you have received from other financial settlement accounts or processes like workers compensation or other insurance.

3. The most important part of the unsatisfied judgment fund for the responsible party is that they must pay money back to the fund until the amount is satisfied. Having the judgment fund pay the victim does not absolve the responsible party from responsibility to pay. The responsible party will have their license revoked until the fund is repaid in full for the accident.

Not all states have enacted a unsatisfied judgment fund at this time, if you think your state should it would be a good idea to write a letter to your local congressional representative.