Why is Uninsured/Underinsured Motorist coverage such an important part of my auto insurance policy?
Unfortunately there is confusion when it comes to the different types of coverage found on one’s personal auto insurance policy. Collision, Comprehensive, Property Damage, Liability, Medical, Per Occupant, Per Incident, Uninsured Motorist, Underinsured Motorist, these are some of the terms and/or coverages you’ll find in your auto insurance policy, but are familiar with what they mean? Perhaps more importantly, are you familiar with what the ramifications are if you do not have sufficient amounts of coverage in these areas?
California state law states every vehicle shall have a minimum amount of insurance coverage in order to be lawfully driven. Those minimum limits are 15/30/5. This translates to A) $15,000 maximum injury or death coverage per person occupying the vehicle B) $30,000 maximum injury or death per vehicle per incident regardless of how many occupants and C) $5,000 maximum for property damage caused. These minimum amounts of coverage were established in the late 1960s, and have not been adjusted since.
So, why is uninsured/underinsured motorist coverage so important? Let’s start with uninsured motorist part of unisured/underinsured motorist coverage. As many as 40% of drivers in California are illegally operating their vehicles without insurance, per the California Highway Patrol. If you are unfortunate enough to be struck by one of these uninsured drivers, and heaven forbid there are injuries to the occupants of your vehicle, your uninsured motorist coverage will pay for the costs involved with treating your occupants’ injuries. However, the coverage will pay only up to the limits of coverage you have purchased. Many people correctly believe their liability coverage protect them from the high costs of a moderate to catastrophic traffic collision that they cause, but they fail to protect themselves when it comes to providing for their own financial needs when the collision is caused by an uninsured motorist. If your uninsured motorist bodily injury coverage has a low limit, or even worse, was waived at the time the policy was issued, you can easily find yourself in debt for tens if not hundreds of thousands of dollars due to medical bills, lost wages, etc..
So, how can you avoid falling victim to an uninsured motorist that collides with your vehicle? A good rule of thumb is to be sure to carry the same amount of uninsured motorist coverage as you do liability coverage. When you do so, you are protecting your family, friends and acquaintances that may be in your vehicle when it is struck by an uninsured motorist. Uninsured/underinsured motorist cove rage is relatively inexpensive for the peace of mind of knowing your loved ones are covered in the case of a catastrophic collision.
Why is underinsured motorist coverage so important? While 40% of motorists in California have no insurance, per the California Highway Patrol, many additional drivers have insurance policies which carry the mandated coverage minimums of 15/30/5. As mentioned prior, these limits were established long ago, and they have not been adjusted in decades. If you are unfortunate enough to be involved in a collision with a motorist carrying the minimum coverage amounts, and, for instance, a passenger in your vehicle is injured severely enough to require hospitalization, there is a very high likelihood that the other motorists $15,000 per person and $30,000 maximum per incident coverage will suffice to cover the costs incurred due to the injuries. Your passenger, whether they are a friend or loved one, will be paying out of pocket for the costs which exceed those limits. However, if you have underinsured motorist coverage, your policy will kick in at the point the other motorist’s policy has reached its maximum coverage. In this example if you carried 250/500 liability and uninsured/underinsured motorist, your policy would begin paying for your injured occupants medical expenses at $30,001 dollars and continue up to $250,000 per injured occupant, or $500,000 per incident maximum.
Uninsured/underinsured motorist is very important in protecting yourself and your loved ones in the event of a collision. I have heard several stories of people like you and me who thought they were adequately insured only to find out too late they were not. It is situations such as these that can lead to bankruptcies and foreclosures when there is not enough coverage to go around for the losses suffered in a collision involving an uninsured/underinsured motorist.
Call us or contact your Broker or Agent today to discuss your coverage, and find out if you have the right coverage for your unique situation.