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Understanding Uninsured Motorist Coverage

Reprinted from the Farmers Cares blog by Paul Quinn:

Most of us driving down the road don’t really give our auto insurance much thought. We’ve spent time with an agent, or over the phone, discussing what is needed and even though the coverages were explained, we forget what the coverages really mean. And, like most insurance, we hope we never need it but are glad we have it if and when we do. One of the coverages most of us have, but rarely use, is the Uninsured Motorist and Underinsured Motorist Coverages.

Uninsured Motorist Coverage (UM) is designed to protect you and passengers in your car for injuries caused by a motorist with no insurance. Each state has laws that address negligence, but in general terms you can use the UM part of the policy if the uninsured driver was at least partially responsible for the accident and your injuries and those of your passengers.

A simple comparison to another section of your policy may help in your understanding of UM coverage. Most states require that you carry liability insurance so that you have insurance in case you cause injury to someone as a result of driving your vehicle. You are at fault and you hurt someone and they need to be compensated for their injuries. The Liability section addresses their injuries up to the limit of your policy. Now turn the tables, you or your passengers are hurt as a result of the negligence of an uninsured driver. Your UM coverage acts like the other driver’s insurance and addresses your injuries up to the limit of your UM coverage.

So, why do you have to pay for UM coverage if your state has Mandatory Insurance for all drivers? Even with Mandatory insurance the Insurance Information Institute estimates that at least 1 in 7 drivers have no liability insurance. So, at a minimum, 14% of all drivers have no liability insurance, leaving you vulnerable
What is Underinsured Motorist (UIM) Coverage? Using the example above, you are hit by a negligent driver but this time they have insurance, but it is less than your UM coverage. For instance, the other driver has 25/50 Liability Limits, or 25,000 per person/ 50,000 total per accident. But, you carry 100/300 UM/UIM limits. Depending on the state where you live, your UIM insurance will apply above the other driver’s limits.
In summary UM addresses your injuries if the other driver is negligent and has no liability insurance. UIM addresses your injuries if the other drive is negligent and has insufficient liability coverage to compensate you for your injuries.

Because UM/UIM coverages vary from state to state, I suggest you contact your agent or insurance company to discuss your policy coverages. It is a good idea to have an annual insurance review, much like your annual physical, at least once a year. At Farmers, we call in the Farmers Friendly Review.
I hope this helps to answer the reader’s question and keep those questions coming.

If you want more information about Auto Insurance products, use the link below to contact Mark Nielebeck who is an agent in Idaho and California.

Mark Nielebeck – President/CEO, LLC.
(208) 340-2200

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