DO YOU HAVE ENOUGH UM/UIM AUTO INSURANCE COVERAGE?
Most people either don’t have enough uninsured and underinsured coverage for their vehicles. This mistake could be catastrophic for you and your family.
What is Uninsured and Underinsured Coverage?
Uninsured and underinsured coverage, often abbreviated as UM/UIM, is an extension of insurance policies that protect policyholders when they are involved in accidents with drivers who either have no insurance or insufficient coverage to fully compensate for damages.
Uninsured Motorist Coverage (UM): This type of coverage kicks in when you are hit by a driver who does not have any auto insurance.
Underinsured Motorist Coverage (UIM): Underinsured Motorist (UIM) coverage comes into play when you are involved in an accident with a driver whose insurance limits are too low to cover the full extent of your damages. In such cases, your UIM coverage can help bridge the gap between the at-fault driver's insurance limits and the actual cost of your damages.
The state minimum for bodily injury coverage is only $15,000 per person and $30,000 per occurrence (commonly referred to as "15/30".) A policy with this coverage will pay a maximum of $15,000 to each injured person in an accident, up to $30,000 for the ENTIRE accident. If a driver with this level of insurance causes an accident, there is almost always not enough to compensate the person(s) they hit.
The Importance of UM/UIM Coverage
Protection Against Uninsured Drivers
In the United States alone, millions of drivers are uninsured despite legal requirements in most states to carry auto insurance. If you are involved in an accident with an uninsured driver and you don't have UM coverage, you could be left to cover your medical expenses, vehicle repairs, and other damages out of pocket.
Coverage Gaps
Even insured drivers who carry higher limits than the state minimum may not have sufficient coverage to pay for all damages in the event of a serious accident. UIM coverage ensures you won't bear the financial burden if the at-fault driver's insurance falls short.
Peace of Mind
Having UM/UIM coverage provides peace of mind, knowing that you are protected regardless of the insurance status of other drivers on the road. It allows you to focus on recovery rather than worry about how you will pay for medical bills or repairs.
Cost-Effective Protection
UM/UIM coverage is relatively inexpensive compared to other types of insurance. The cost is typically a fraction of the overall premium but provides substantial financial protection in case of an accident with an uninsured or underinsured driver.
Legal Compliance
In some states, UM/UIM coverage is mandatory, highlighting its importance in the eyes of legislators who understand the risks posed by uninsured drivers.
Should I have UM/UIM Coverage?
Every driver should have UM/UIM insurance coverage. Not only should their insurance policy include the coverage, but it should be the same limit as your liability coverage. Since liability coverage comes into play when you cause an accident and hurt someone else, doesn’t it make sense that you should enjoy the same type of coverage to protect yourself and your family if you get hurt? Our firm has a saying, “Don’t insure the world for more than you insure yourself and your passengers.” An example of putting this in practice would be where you may buy $100,000 in liability coverage that pays out for the other driver’s injuries; you should also purchase the same amount in coverage for UM/UIM, because this is the coverage that protects you and your passengers.
We recommend that you purchase the highest liability limits you can afford. In our line of work, we often meet people who have been catastrophically injured by uninsured drivers or drivers who only carry the State minimum coverage of $15,000/$30,000. If you can afford higher coverage, buy it. If you can’t, ask for quotes for a lower amount that is within your budget but provides your family security.
Scenario #1: You are hit by a distracted driver who ran a signal. In your car, you and two other people are injured pretty seriously. You broke your leg and will need multiple surgeries and cannot work for months. One of your passengers sustained a traumatic brain injury and will need care for the rest of her life. The other passenger broke his arm and had pain and bruising. The person who hit you is uninsured. What happens now? Since the other driver cannot pay for your injuries, future care, or lost wages, we would turn to your insurance policy to determine if your uninsured coverage can pay for your losses. Unfortunately, you only bought a state minimum policy of $15,000/$30,000 for UIM. You and your two passengers are only eligible for up to $15,000 each, but not more than $30,000.[1] Many times, this tiny pot of money will cause a legal fight between injured parties. The car accident has now not only changed your and your passengers’ lives because of the injuries and pain you have all suffered, but now there is a good chance you will all be in financial ruin. If only you would have increased your UM/UIM coverage like that article you read advised.
Scenario #2: You are hit by a distracted driver who ran a stop sign. In your car, you and two other people are injured. You broke your leg and will need multiple surgeries and cannot work for months. One of your passengers sustained a traumatic brain injury and will need care for the rest of her life. The other passenger broke his arm and had pain and bruising. The person who hit you is uninsured. What happens now? Since the other driver’s policy is too small to fully compensate you and your passengers for your injuries, future care, or lost wages, we would turn to your insurance policy to determine if your underinsured coverage can pay for your losses. Unfortunately, you have only bought a state minimum UM/UIM policy of 15,000/30,000. Since liability coverage and UM/UIM coverage do not “stack” (they do not add together), you and your two passengers only have 30,000 to split among yourselves to pay for all your medical treatment, future care needs, lost wages, and pain and suffering. The car accident has now not only changed your life because of your and your passengers’ lives because of the injuries and pain you have all suffered, but now there is a good chance you will all be in financial ruin.
Scenario #3: You are hit by a driver that crosses into your lane. In your car, you and two other people are severely injured, requiring weeks in the hospital and many surgeries. The person who hit you only has state minimum liability coverage of 15,000/30,000. What happens now? Again, we would turn to your insurance policy to determine if your underinsured coverage can cover your losses. Good news! You read this article and made changes to your policy. You now carry 500k/1M in UM/UIM coverage. You and your passengers have 1,000,000 to cover your losses.
How to Obtain UM/UIM Coverage
UM/UIM coverage can be added to your existing auto insurance policy as an endorsement. It's essential to review your policy limits to ensure they are adequate to cover potential damages in various scenarios. Talk to your insurance carrier and ask about your coverage. If your agent or customer service is not helpful, find another agency, like the locally owned Bidwell Insurance Agency.
Conclusion
Uninsured and underinsured insurance coverage is not just a recommended add-on; it's a crucial aspect of comprehensive financial protection for you, your family, and future passengers. Whether you're driving, cycling, or simply walking near traffic, UM/UIM coverage ensures that you're not left financially vulnerable due to the actions or negligence of others. Understanding and investing in UM/UIM coverage is a proactive step towards safeguarding your financial well-being in an unpredictable world.
If you're a driver in Chico, CA, and want to ensure you are fully protected on the road, consider investing in UM/UIM insurance coverage. At Peters, Habib, McKenna, Juhl-Rhodes & Cardoza, LLP, we understand the importance of comprehensive coverage and are here to help you when you have been seriously injured.
Don't wait until it's too late—protect yourself and your loved ones with the right insurance coverage.
** Check out our next article on the importance of MedPay coverage on your automobile insurance policy**
[1] If either of the passengers have their own insurance policies that have UM/UIM coverage the covered passenger can receive additional funds. However, these funds cannot help you or the other passenger. As the driver, your policy covers your passengers but your passenger’s policies do not cover you.