The Importance of Having Underinsured and Uninsured Motorist Coverage

Uninsured Motorist and Underinsured Motorist Coverage (UM/UIM) is available as additional insurance coverage in your auto policy.  Many overlook or don’t understand the importance of this coverage.

            You see, there are over 2.6 Million drivers on the road without any insurance coverage for injured victims from their negligent driving.  Wow, you say!  How that be despite the fact that proof of insurance is necessary to register a vehicle.   It is easy: policies get cancelled or premiums are not paid on time, so the vehicle remains uninsured for liability of a driver who negligently injures another, passenger or someone in another vehicle.

            So how do you protect yourself?  You buy UM/UIM coverage which is a part of your auto policy.  That is, if the negligent driver injures you or someone in your car, and has no insurance, then your insurance company steps in as if it was the insurer of that negligent driver and your policy then provides funds to pay for that wrongdoing.  This is uninsured motorist protection.

            Underinsured motorist protection is a bit different.  It protects you and your passengers from the negligent driver who does not have sufficient insurance to pay for your claims.  For example, if the negligent driver has liability insurance coverage of $15,000 per person, and $30,000 per accident (known as 15/30), and you are injured but have $100,000/$300,000 in underinsured motorist coverage, you can collect the $15,000 from the insurance company of the negligent driver and also another $85,000 from your own insurance policy, which is the balance of the limits of your coverage over the negligent driver’s policy.

            In the context of underinsured motorist coverage, California is a “set off” state. That is as noted, what you collect from the negligent driver is subtracted from the coverage you have.  Other states, such as Nevada, allow the policies to be “stacked” so in Nevada, in the same circumstance, you would collect the full amount of your UIM coverage.

            Frankly, in California in the underinsured coverage situation, you can never collect your full limits because of this reduction; thus, you pay for coverage you will never have!  But that is the way it is structured in our state.  A change should occur so that the full limits are available so we are not a “set off” state anymore. 

            With so many drivers without insurance on our highways, it is critical for you to purchase the highest amount of UM/UIM coverage you can. But it will not happen unless you ask your insurance company about this, and also shop to get the best coverage.  It is not expensive, but it does require for you to have the same limits of liability insurance (your protection for others who are injured by your negligent driving or someone else who negligently drives your car) in order to qualify for the increased limits for UM/UIM.


            For example, you can get $300,000/500,000 UM/UIM limits if you have liability limits in the same amount.

            But your insurance company does not have to offer this.  It is only required to offer UM/UIM limits in the required mandatory minimum limits for California, that is $15,000 per person and $30,000 per accident.  And in order for an insurance to avoid issuing this UM/UIM coverage an insured must “waive” that coverage in writing. So that is all that the insurance company will do.

            Seldom your agents or brokers selling auto insurance explain the importance of UM/UIM coverage.  At least that is my experience. 

            In addition to getting the highest amount of UM/UIM coverage for you and your family, I also recommend you explore obtaining excess UM/UIM coverage of at least $1 Million.  This will require you to have an excess policy with $1 Million in liability limits.  But this excess coverage is not expensive, and a main reason for having it is so you have this additional $1 Million in protection for you and your family.

            Don’t overlook this aspect of insurance protection.  For more on this check my website, or call our office for other articles on personal insurance that we believe you should have.  (We don’t sell insurance or benefit from you purchases; but we are relieved when a client who has been injured by a negligent motorist who has no or insufficient insurance has large limits of UM/UIM protection so that we can obtain adequate compensation for the injuries.)

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