Why do we need uninsured/underinsured motorist coverage, also known as UM/UIM? What is it? Am I being sold something that I do not need? These are questions you may be asking when you look at your insurance bill. Or, these are question you may have asked when you are contracting for automobile insurance coverage with your insurance agent. But if you are not asking these questions, maybe you should.
Uninsured motorist coverage is coverage that protects you when the driver that hits you is driving an uninsured vehicle. So in other words, you have coverage in a wreck where you are hit by an uninsured vehicle. Similarly, underinsured motorist coverage is coverage that protects you when you are in a bad accident and the driver that hits you is driving a vehicle with minimal coverage.
Consider this true story: our client comes in after an awful wreck. She was hit by a crazy driver who was raging up the road. Our client is severely injured and ends up with substantial hospital and medical bills. The crazy driver was uninsured, driving an uninsured vehicle. Our client told us that she had “good insurance.” We had her to bring in her declaration sheet and policy. As it turns out, she had good insurance coverage for her ($300,000), however, she had recently reduced her UM/UIM coverage from $300,000 to $25,000, in order to save a few hundred dollars in car insurance per year. It is this latter coverage that applies in this case. Unfortunately, she made this change just a couple of months before the accident. So this change may have cost her up to $275,000 worth of coverage for medical bills, pain and suffering, and other compensation!
In contrast, and in that same wreck, was a passenger who had good insurance but never reduced the UM/UIM coverage. She is now stands in a much better position to recover, both from a health standpoint and financially.
When you are purchasing car insurance you should consider this real world story and ask yourself whether you are really covered by your policy.