Uninsured Motorists Coverage: What Is It and Why Do I Need It?

According to a 2017 study by the Insurance Research Council, in 2015, 13 percent of motorists, or one in eight drivers, was uninsured.

For this reason alone, Uninsured Motorist Coverage (UM) /Underinsured Motorist Coverage (UIM) insurance may be the most important coverage on your auto policy.

With the exception of New Hampshire, all states require auto insurance. And even though insurance is mandatory in this state, California rates 12^th in the nation – with uninsured motorists totaling 15.2%. Penalties, depending on how many times a driver has been cited, range from steep fines to vehicle impoundment to license suspension for up to four years. For the most part, people choose to not purchase auto insurance because of the price. Additional reasons for non-coverage include people driving without licenses and late payments that result in canceled coverage.

Purchasing UM/UIM protects you for harm caused by another driver who has little or no insurance. For example, if the accident is their fault and they have no insurance, you can file a claim on your own insurance policy to cover your injuries. (This will not result in your insurance premiums increasing since the accident was not your fault.) If the other driver has the minimum liability policy required in California, $15,000 per person/$30,000 per accident, the most you can collect against the at-fault driver (assuming you were the only person injured in the crash) is $15,000. With the price of an ambulance trip and emergency room visit, you could easily exceed $15,000. If you had underinsured motorist coverage of $100,000 on your policy, you could potentially collect up to $85,000 from your own insurer ($15,000 from the at-fault driver plus $85,000 from your underinsured motorist policy, for a total of $100,000 maximum). If you had higher limits, you could submit a claim up to the amount of your limits.

If an insured driver turns down UM/UIM (and to do so he/she must sign a waiver acknowledging this risks), he/she is running a risk of paying for damage to his/her own car and any medical bills that could arise. This is not advisable. Another example where UM/UIM can apply is if you, or a covered family member, are hit by a car while walking or riding a bicycle, or if you are injured as a passenger in someone else’s vehicle.

Consumers can be protected by a few options:

• Uninsured motorist bodily injury (UMBI): This pays for injuries to you and any person in your car when there is an accident with an uninsured driver who is at fault. The limits are the same as your liability coverage limits.
• Underinsured motorist (UIM): This covers limited costs for bodily injury if you are in an accident with a driver who does not have enough insurance to pay for the damage.
• Uninsured motorist property damage (UMPD): This pays for the damage to your car from an accident with an uninsured driver who is at fault. In most situations, this only pays if the uninsured driver is identified.

Sadly, we’ve seen unfortunate cases where individuals are catastrophically injured in a car crash with a driver who does not have enough insurance, and unless you have adequate underinsured motorist policy limits, you may be left without being fully compensated. Think of this coverage as protecting you and your family, while the liability coverage is protecting others. Another good policy to check is medical payments. This could help cover your out of pocket medical expenses in the event of a crash, up to your policy maximum. This type of policy protects you and your family if you are struck by a hit and run driver and can include pain and suffering, medical bills and lost wages.

The bottom line? The benefits of UM/UIM far outweigh the costs. Taking into account the coverage limits, the additional cost typically ranges between $33 and $134 per year. This is highly worth it when a hospital stay from an accident can run tens of thousands of dollars.