Uninsured Motorist and Underinsured Motorist Coverage (UM/UIM) is available as additional insurance coverage in your auto policy. Many overlook or don’t understand the importance of this coverage.
What is this coverage? It is purchased as part of your vehicle coverage. It is a separate type of insurance that protects you, the occupants of your vehicle, and others who are family members living with you, from being injured by a negligent motorist who is driving without or with insufficient insurance coverage on that vehicle to pay for the injuries caused.
Why is it valuable? If the negligent driver injures you or someone in your car, and has no insurance, then your insurance company steps in as if it was the insurer of that negligent driver and your policy then provides funds to pay for that wrongdoing. This is uninsured motorist protection.
Underinsured protection is different. It protects you and your passengers from the negligent driver who does not have sufficient insurance to pay for your claims. California is a “set off” state. That is, what you collect from the negligent driver is subtracted from the limits of the underinsured motorist coverage you have. (See the example below.)
Frankly, in California in the underinsured coverage situation, you can never collect your full limits because of this reduction; thus, you pay for coverage you will never have! But that is the way it is structured in our state. A change should occur so that the full limits are available so we are not a “set off” state anymore. Example: If you are injured by a negligent motorist with only $15,000 per person coverage in that vehicle’s policy (the minimum limits required), and you have greater coverage for UM/UIM, say $300,000 per person, you have an additional sum of $285,000 available to pay per person for the injuries caused by that negligent motorist. As noted, the amount of coverage for the negligent driver is deducted from your limits so you have the difference available. The “per person” limits on your policy are limited to the “per occurrence” (i.e. for one accident) limits of that policy. For example, you may have $300,000 per person coverage but $500,000 per accident, so the total amount available is limited to $300,000 for any one person, but $500,000 for all persons injured in an accident.
How much is it worth? Under California law, you must be offered the opportunity to include UM/UIM coverage in your policy at least for the minimum limits required of $15,000 per person and $30,000 per occurrence. While the statute does not require insurance companies to offer this coverage above limits of $30,000 per person, and $60,000 per occurrence, many insurers do. However, there are conditions to purchasing these greater limits. To qualify for the increased UM/UIM limits you must purchase the same liability limits (governing claims by others if you are negligent).
Do not sign the waiver: To delete this coverage from your auto policy, you must sign a written waiver of it. That is not wise. Indeed I recommend not only that you include it but that you also apply for much higher limits to protect yourself, other occupants of your vehicle, and family members living with you from being injured by a negligent driver who does not have sufficient liability insurance to pay the full cost of the injuries resulting from that vehicle’s negligent operation. Most carriers will offer higher limits, but you should confirm that through your insurance agent.
Why do you need this coverage? The answer is because there are over 2.6 Million drivers on the road without any insurance coverage for injured victims from their negligent driving. Wow, you say! How does that happen if proof of insurance is necessary to register a vehicle. It is easy: as noted, the required minimum limits is only $15,000 per person, and $30,000 total for any one accident. In any case of real injuries, this is hardly enough to pay for medical bills, let alone income loss or pain and suffering. Also, policies get cancelled or premiums are not paid on time, so the vehicle remains uninsured for liability of a driver who negligently injures another, a passenger or someone in another vehicle.
With so many drivers without insurance on our highways, it is critical for you to purchase the highest amount of UM/UIM coverage you can. But it will not happen unless you ask your insurance company about this, and also shop to get the best coverage. It is not expensive.
Seldom do agents or brokers selling vehicle insurance explain the importance of UM/UIM coverage. At least that is my experience.
Get as much as you can: In addition to getting the highest amount of UM/UIM coverage for you and your family, I also recommend you explore obtaining excess UM/UIM coverage of at least $1 Million. The main reason for having it is so you have this additional $1 Million protection above your primary policy’s coverage or you and your family.
Our work: Recently, an article in Forbes magazine featured a story on a case in which we represented a young man who was very seriously injured by an intoxicated driver who had no insurance. Fortunately, his family had primary UM/UIM coverage plus an excess policy which provided for the son’s medical and other needs. They were so thankful that they had acted prudently and asked for and obtained this coverage.
Don’t overlook this aspect of insurance protection. For more on this topic, visit our website, or call one of our offices (see numbers below) for other articles on personal insurance that we believe you should have. (We don’t sell insurance or benefit from your purchases; but we are relieved when a client who has been injured by a negligent motorist who has no or insufficient insurance has large limits of UM/UIM protection so that we can obtain adequate compensation for the injuries.)