Why You Should Have Uninsured Motorist Auto Insurance

Many people reject Uninsured and Under-Insured Motorists coverages (UM/UIM) when choosing auto insurance online or with an agent. Unless it is explained to you, you may be rejecting a very essential coverage that you will need.

People mistakenly think that UM coverage will pay for an uninsured person. This is not the case. This coverage is designed to protect you if you are not at fault in an accident and the other person is not insured. If you do not have this coverage and they are uninsured, you have no way to recoup your damages or medical expenses other than taking the person to court and hope they pay. 

auto wreckMost states have two parts of UM coverage: The Bodily Injury (UMBI) and the Property Damage (UMPD). Make sure if your state has the option for both that you take both. Otherwise, if you only have the UMBI you will have coverage for your medical expenses only, up to the limit. However, if you have damage to your auto and you do not have the UMPD, you will have no coverage for your damage. 

In some states, uninsured damage to your auto is covered under collision. Therefore, if you do not have collision coverage in those states, you won’t be covered. Make sure you check with your knowledgeable agent to advise you on the options.

The sister coverage to UM is Under-Insured Motorists (UIM) coverage. This is coverage that extends to you more benefit if the driver who hits you has less coverage than your limits and your medical expenses or property damage exceed his or her limits.

For example, Belinda has a beautiful, brand new Jaguar XFR, and she has full insurance coverage. She has Comprehensive, Collision, and Bodily Injury Liability (BIL) limits that are $100,000. She also has Property Damage Liability (PDL) up to $100,000. She has matched her UM and UIM to the $100,000 limits, including UMPD of $100,000. 

Glenn has an old beat up Chevy truck and only carries BIL and PDL for $25,000. Glenn is having a bad day and runs a red light going pretty fast and slams into Belinda.

When the dust settles, her $80,000 Jag is totaled and she has $60,000 in medical expenses. Glenn is completely liable for all these expenses. His insurance company pays out the maximum it can: $25,000 of Belinda’s medical expenses and $25,000 towards her Jag.

What can Belinda do?

worried about insuranceBelinda can call her insurance company and let them know what happened (she should do this as soon as she is able after the accident anyway). Once Glenn’s insurance company contacts Belinda’s insurance company and advises that $25K is all she gets, Belinda’s insurance company will then take the remaining $55K for her car and $35,000 remaining of her medical expenses and pay them. Then, Belinda’s insurance company goes after Glenn for payment. 

This will provide Belinda with a quick resolution to her problem and she will not be the one tied up in court chasing Glenn for the remaining balance. Her prudent choice of higher coverages and UM/UIM coverage has allowed Belinda to get back on the road and get her bills paid with minimal inconvenience.

It is also a good lesson for Glenn. It is very wise to carry more coverage even if it is not required by the state. For most safe drivers, the difference between $25K and $50K is literally a few dollars a month. Always ask for price comparisons with different limits and coverages to be sure you are getting the best protection for your money.