BY: Chuck Gibson, CLU, AAI, CIC
Sales Executive – Personal Insurance
cgibson@bankersinsurance.net | (703) 896-4100
On average, 13% of drivers in the U.S. do not carry auto insurance 1. In fact, depending upon the state, that figure can be closer to 30% – almost one in three! Even worse, that statistic does not include drivers with inadequate levels of coverage. If your vehicle is damaged by one of these drivers, or you or your passengers are injured, who will pay for those expenses? The same issue exists with hit-and-run situations where an at-fault driver cannot be identified. Protect yourself from these drivers by carrying uninsured and underinsured motorists coverage. Read on to learn how.
Uninsured Motorist Coverage (UM)
Uninsured motorist coverage in an auto insurance policy pays if you are involved in an accident caused by another party who is not insured. UM coverage is optional in many states, and some drivers, not knowing its benefits, opt not to carry it. Two types of uninsured motorists coverage exist: 1) UM bodily injury which includes injuries to you and your passengers, and 2) UM property damage which protects against damage to your vehicle and other property. These can have different levels of protection specified on the policy. In most states, uninsured motorists coverage also protects victims of a hit-and-run, whether involving a car, bike, or pedestrian.
Uninsured motorists coverage can minimize costs of vehicle repair and medical bills. Eighteen states plus Washington DC require UM coverage 2. Below are auto insurance requirements by state as of January 2022, courtesy of Insurance Information Institute.
Underinsured Motorists Coverage (UIM)
In contrast to uninsured motorists, underinsured drivers have car insurance, but not enough to fully compensate an injured party. Referencing the table above, drivers can carry as little as a $10,000 insurance limit, which does little to pay for medical bills. Once the at-fault driver’s insurance is exhausted, underinsured motorists coverage (UIM) can step in to cover remaining costs for injuries.
In most states, underinsured motorist coverage is optional. And like uninsured motorists coverage, there are two types of UIM protection: UIM Bodily Injury and UIM Property Damage which protect against the same injuries and damages as their uninsured motorists counterparts. Many states permit or even require stacking of UM and UIM coverages if multiple vehicles on the same insurance policy carry the coverage. This means insurance limits can be combined between the vehicles to create a higher limit. Stacking laws vary greatly by state, so ask your insurance agent any state-specific questions.
Excess Uninsured and Underinsured Protection
With 13% of drivers nationwide driving without insurance, uninsured and underinsured motorists coverage is essential. However, even with these protections, coverage may prove inadequate. Excess UM/UIM is available through a personal umbrella insurance policy which increases auto insurance limits. This coverage is triggered after the auto policy limits are used up.
Our View
We recommend every client maintain uninsured motorists coverage and underinsured motorists coverage up to their full policy limits. Further, we recommend the purchase of personal umbrella protection including excess UM/UIM. These coverages are reasonable in price and well worth the reduced risk.
Questions on car insurance? Contact your Bankers Insurance agent. Not a client of ours? Let us earn your business! Each of our clients is assigned a personal insurance agent and provided their email address as well as a phone number that rings right on their desk.
References
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