Blog Topic

Underinsured & Uninsured Insurance For Your Car: Don't Leave Home Without It
Posted by: Craig Knapp
December 06, 2009

Too many times I'm faced with having to advise a client AFTER the fact on the importance of carrying underinsurance (also known as UIM coverage) and uninsurance (also known as UM coverage).  This type of insurance is very cheap and will be extremely valuable if you, or a loved one, are invovled in a car accident.  The reaction from my clients is always the same...."I wish I had known."   UIM and UM coverage cannot be purchased in amounts greater than your bodily injury liability coverage amount.   

How does UIM and UM insurance work?  Consider this hypothetical:  You're invovlved in a wreck and suffer serious injuries (e.g., broken neck and you lost 2 months of work) after a car runs a red light and crashes into the side of you.  The other driver is at fault and has $100,000 of auto insurance to cover your injuries and medical expenses.  Lets assume your damages, the amount you're entitled to for pain, suffering, lost wages, medical bills, etc., is approximately $200,000.  How are you going to collect the other $100,000?  Does the driver of the car that hit you personally have $100,000, or any money over and above his/her auto insurance limit, to pay what they owe you?  There answer in almost every case is NO.  Here is where UIM comes into play.  If you have UIM coverage on your policy, your insurance company will pay you the remaining $100,000.  You're now compensated for your losses and injuries without trying to collect money from someone that does not have it.  

It should also be noted that in a case where there's an unfortunate death from a car accident, more likely than not the surving family members will only be able to collect the available insurance from the negligent driver (in a lot of cases that's only $30,000 or maybe $50,000).  Most people do not have money or assets to pay for this type of loss.  UIM coverage would apply to this situation as well.   

What Can You Do To Protect You And Your Family?  Under Arizona law (A.R.S. § 20-259.01) every insurance company MUST OFFER YOU IN WRITING UIM AND UM COVERAGE with limits not less than the bodily injury liability limits of your policy.  GET BOTH (UIM and UM coverage)!  Also, make sure your UIM and UM coverage is EQUAL, not less than, your bodily injury liability limit.  It's cheap, typically an extra $50-$75 dollars a year, and will really come in handy if your or a family member is faced with a seriously injury or death.

UM, or uninsured coverage, works the same way only UM coverage comes into play if the driver that caused the accident does not have ANY insurance.  You would then collect from your insurance company the damages you are entitlted to recieve (pain & suffering, medical bills, lost wages, etc.).    

How Do I Find Out If I Have UIM And UM Coverage?  Get a copy of your declaration page from your insurance company or broker.  The declaration page will list the coverages you purchased.  Review your auto policy today and get UIM and UM in equal amounts to your bodily injury liablity limit.  Your bodily injury liability limit, UIM limit, and UM limit SHOULD ALL BE AT LEAST $250,000, IF NOT MORE.  Purchase what you can afford but don't be cheap in this area.  The costs are too great should something serious happen on the road to you or someone in your family.  

Permalink