Many people are not told by their brokers regarding the importance of Uninsured and Underinsured motorists coverage when they’re buying auto insurance. This coverage is most commonly seen on insurance policies as UM/UIM coverage, and going without this coverage completely or having too little could cost you much more in the future than it does in premium. This coverage is there to protect you, and passing on it means you’re rejecting an important coverage you may need one day.
People often say, “I have full coverage”, assuming their policy covers them in an accident. However, “full coverage” means your insurance company will pay for damages suffered by another person if the accident was your fault. That’s what your liability coverage does (bodily injury and property damage). People get liability coverage because they know it’s required by law and in most cases will protect them from personal liability.
UM/UIM coverage is there to protect you. If you’ve ever been in an accident, you know the immediate, sickening feeling that follows. You also know how that feeling mounts when you start wondering if the at-fault driver has insurance or enough insurance to pay your damage or medical bills. Now imagine how sick you’d feel if you did find out the driver didn’t have coverage or speeds off, leaving you with the bill.
If the person that caused the accident does not have insurance and can’t pay for your medical bills, legal costs, property loss, and other incidental expenses like lost wages, the UM/UIM coverage on your policy would pay for these expenses. If you don’t have this coverage and the person at-fault doesn’t have insurance, you’re out of luck when it comes to recouping any damages, losses, or expenses you incurred from the accident. The only thing you could do is take the person to court and cross your fingers, but odds are, if they don’t have insurance, they’re probably not going to have thousands and thousands sitting in their checking account to pay for your damages. Unfortunately, the odds are against you if you’re in an accident with someone who doesn’t have auto insurance.
UNINSURED/UNDER-INSURANCE MOTORIST COVERAGE (UM/UIM)
UIM coverage helps pay for any differences in expenses and losses that you incur if the person who is at fault doesn’t carry enough insurance to pay for the damages. If your loss, damages, medical bills, or other expenses cannot be covered by the other person due to an insufficient amount of coverage, UIM coverage will kick in once your expenses have exceeded their limits.
For example, let’s say you’re in an accident and have a great insurance policy, as they say, you have “full coverage” with comprehensive, collision, and bodily injury liability of $100,000. You also have a UM/UIM coverage limits of $100,000. If you get into an accident and are injured and the other car which was at fault carried only a $25,000 liability coverage, your UM/UIM coverage can pay up to $75,000 to you for your injuries. Again, UM/UIM coverage is to protect you against other motorists, if necessary.
Another plus in that situation is that once you’ve reported the accident to your insurer and they’ve discovered the driver has insufficient coverage, your insurer may pay the difference and then go after the driver to get paid back. this is known as subrogation.
Bottom line:Make sure your UM/UIM insurance policy is at least $100,000 in order to protect yourself from an uninsured or underinsured motorists when in an accident.
This article is strictly a way to assist in your insurance decisions by providing answers to readers’ insurance questions. Please note that the content is written on a broad level and is general in scope, therefore your personal information is not considered. You should not consider the content personal insurance advice or personal insurance guidance, nor should you consider it personal financial advice or personal financial guidance. We recommend that you consult with a professional who is familiar with your individual circumstances before making any final insurance decisions or final financial decisions.