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Do I Need Uninsured and Underinsured (UIM/UM) Coverage?

23 Mar 2018

Nearly 1 out of 8 drivers in the United States are uninsured. An even higher number are considered underinsured, which means they do not have enough coverage to pay for all of the damages they cause in an accident. If you are involved in an accident with an uninsured or underinsured motorist, you may have little recourse for recovering the compensation you need to move on with your life.

That’s where uninsured/underinsured motorist (UIM/UM) coverage comes in. This form of auto insurance protects you by paying for your property damage, medical expenses, and lost wages if you are hurt in an accident with an at-fault driver. Here’s why UIM/UM coverage is so important.

Your Options for Recovering Compensation
If you are hurt in an accident and the other driver is at fault, you have just two options for recovering compensation. The first option is a claim through the at-fault driver’s insurance policy. Every driver is required to maintain at least state-mandated minimum liability insurance, which pays for damages the driver causes in an accident. Unfortunately, about 13% of drivers on the road do not have even the legal minimum amount of liability insurance.

Even if the driver does have insurance, the state-mandated minimum is unlikely to fully compensate you for your damages. The average wage loss in an accident is more than $2,500. The average hospital stay costs around $10,000. Very serious accidents can lead to medical bills of $500,000 or more, especially when long-term care and disability is involved. A liability policy with $15,000 to $30,000 in coverage may not be enough.

You have the right to sue the at-fault driver for your damages if they do not have insurance or lack sufficient coverage. Of course, people who do not maintain car insurance likely do not have sufficient assets to pursue in a lawsuit, even if your case is successful. Studies have found that the average uninsured driver is unemployed or works at a low-paying job, pays rent for an apartment, and has little savings.

If you have UIM/UM coverage, you can instead file a claim against your own insurance policy to recover your damages.

How Uninsured/Underinsured Motorist Coverage Works
UIM/UM coverage gives you recourse if you are involved in an accident with an uninsured or underinsured motorist or a hit-and-run driver. UM coverage pays for lost wages, medical expenses, and pain and suffering if you are injury and the at-fault driver fled the scene or did not have insurance. UIM coverage kicks in to pay for lost wages and medical bills above the limit of the at-fault driver’s policy up to your policy’s limits.

UM/UIM works like the liability bodily injury and property damage coverage on your existing car insurance policy and it will have the same coverage limits you chose. If you have car liability insurance with 100/300/100 limits, the UM/UIM insurance will have the same 100/300/100 limits. Your UM/UIM coverage will pay for your injuries in a traffic accident even if you were injured as a pedestrian or hurt while riding in someone else’s car.

Your car insurance policy may already offer some protection against uninsured drivers, even without UIM/UM coverage. Personal injury protection (PIP) and medical payments coverage help pay for your medical expenses, regardless of who is at fault for your accident, even if it’s an uninsured motorist. If you have collision coverage, you already have coverage to pay for property damage to your car.

Don’t assume that health insurance is enough to protect you in an accident. Your health insurance policy will only pay for the treatment you need after the accident. You will be responsible for co-pays, deductibles, and limits on some types of car. This can add up to thousands, depending on your injuries and insurance policy. Your health insurance will not pay for other damages, either, including lost wages while you recover and pain and suffering.

About half of all states currently require some type of UIM/UM insurance while some require that you decline this coverage in writing if you do not want it. Uninsured/underinsured motorist coverage is always recommended, however, because it’s an affordable form of protection that can guard against the very real risk of a hit and run or uninsured driver.

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