Steering Clear of Uninsured and Underinsured Motorists

It was a beautiful day and our client was enjoying an afternoon drive, windows down, elbow resting on the door. But in a moment delight turned to horror; her car was broadsided by another vehicle and rolled. She was successfully extracted from the wreckage, but the incident was not without major consequence. She had lost the use of her arm forever. Making matters worse, the motorist responsible for the crash was underinsured, leaving our client responsible for most of her costly and continuing medical expenses, lost wages, as well as the help she needed to care for her children as she healed.

Unfortunately, this is an all-too-common occurrence. In 2019, one in eight drivers was uninsured, according to the Insurance Research Council—and that is before the pandemic wreaked its financial havoc. Recently, our claims advocates have noticed that more motorists than ever are significantly underinsured, with liability policies sufficient to cover only the smallest damages. At the same time, our roads have become more dangerous with 2020 being the worst year for U.S. traffic deaths in more than a decade.

All of which explains why we are educating our clients about the importance of Uninsured and Underinsured Motorist (UM/UIM) coverage. This auto policy coverage component is as undervalued as it is vitally important to your financial peace of mind.

How motorists end up with too-little insurance—or none at all—and why that could matter to you

First, a little refresher: Typical automobile policies have many elements, to cover everything from vehicle damage (yours and others involved in an accident) to medical bills (yours and your passengers) to liability (the cost of harm, if you are at fault). The first two types of coverage are optional, but liability is mandatory in every state except New Hampshire. The amounts mandated, though, are often quite low; in any event, many motorists cancel those policies or cut them back even further once they have obtained their registration.

There are two factors to blame for that:

  • Tight wallets: Yes, the economy has rebounded well since the early days of the pandemic. Still, many bank accounts have not fully recovered from the virus’s significant financial hit. And when people need to save money, insurance is often one of the first cuts.
  • Name-your-price insurance: Many drivers purchase policies online, without any expert guidance. With some carriers allowing people to decide what they want to pay, that can too often result in a purchase of the least-possible coverage.

If an uninsured or underinsured driver causes an accident in which you are harmed, your automobile policy will not necessarily cover the totality of the costs, or even the majority of them. You can sue to recover your losses through the responsible party’s assets, but what if they have none? Any state mandated Uninsured and Underinsured Motorists coverage is not at all unlikely to make you whole either.

A very worthwhile fix
We encourage our clients to layer protections onto their auto insurance programs in order to maintain the highest levels of medical care and lifestyle security should a tragedy occur. We believe that though no one can predict accidents, everyone can effectively anticipate them. Consider another one of our clients who was standing on a sidewalk outside a car wash when she was hit by a car in a chain-reaction crash on the street. She spent the next four months in the hospital with a traumatic brain injury and continues to work with a neurologist and a therapist to recover. The two at-fault vehicles had liability coverage of $50,000 and $300,000, respectively—nowhere near enough to cover her ongoing expenses. But because she had added UM/UIM coverage to her auto and umbrella policies, she could rely on an extra $1.5 million to foot her bills.

Here is the kind of policy inclusions we recommend to each of our clients:

  • UM/UIM coverage: To provide financial assistance when you are in an accident with an at-fault driver who carries no liability insurance or whose liability limits are too low to cover the resulting damage or medical expenses.
  • Excess UM/UIM coverage: To provide additional financial assistance to you or a family member beyond the maximum of your primary UM/UIM coverage. (Regular UIM coverage takes care of the amount beyond the at-fault driver’s policy limits, up to the UIM policy’s limits.)

Simply put, acquiring these coverages means you never have to worry about another driver’s insurance choices. If the responsible party doesn’t have high enough limits to cover the necessary costs, your coverage will respond in place of that party, and your family and your assets will be properly protected. If you are unsure of whether you have the appropriate UM and UIM policies, please contact us for a quick review.