Uninsured (UM) or Underinsured Motorist (UIM) Coverage – what you should know


Uninsured (UM) or Underinsured Motorist (UIM) Coverage

If you lack uninsured/underinsured (UM/UIM) auto insurance, you can be at financial risk should you ever become hit by an uninsured motorist or by someone without adequate coverage. Believe it or not, it is a much more common occurrence than you might think. The National Association of Insurance Commissioners reports that almost “13 percent of motorists, or one in eight drivers, are uninsured”.

I’ve never been in the scenario where UM or UIM coverage was required however, I am still grateful for the coverage.  As a former insurance professional, this was and is my worst nightmare – failure of someone else to protect themselves financially and I am stuck with the bag.  Luckily it hasn’t happened to me, and hopefully it won’t happen to you.  At least you will protect yourself from it happening….

Whether its protecting your teenagers, your spouse, or yourself auto insurance is a great product – it is the execution or customer service side that sometimes gives insurance a bad reputation – but insurance is inherently good.  Within the auto product is a coverage for Uninsured or Underinsured Motorists Coverage – I think it is time, people understand this coverage better.

 

Uninsured motors (UM) coverage

Uninsured motors (UM) coverage compensates an insured for bodily injury caused by an uninsured motorist, a hit and run, or a driver who’s insurance company is insolvent.  UM is mandatory in many states and optional in others.  This is a great coverage to cover you in the event you are injured by a negligent driver who didn’t take the appropriate/prudent actions to protect themselves and others.

There are several disadvantages to UM:

  • an injured person may not be compensated for their loss.  The maximum paid for Bodily injury is limited to state or compulsory law
  • property damage is excluded in many states
  • the victim is paying for insurance that the negligent party failed to buy
  • legal responsibility must be established before payment is made.  Therefore legal expenses can add up proving legal responsibility

 

Underinsured motorist (UIM) coverage

Underinsured motorist (UIM) coverage provides additional limits of protection to the victim of an auto accident when the driver at fault doesn’t have enough limit to pay for the damages.  UIM coverage ban be added by endorsement to an auto policy.  UIM Coverage can be triggered when the losses are greater than the at-fault driver’s liablity limits or when the the limits are lower than the injured person’s UIM coverage.

A disadvantage is that the victim is again paying to protect from a negligent driver who didn’t take the appropriate/prudent actions to protect themselves and others.

 

Interaction of coverages

It is important to understand the differences between these two coverages.  They do not overlap, duplicate, or you cannot collect under both coverages.

InsuranceShark recommendation:

Your net worth is potentially exposed everyday by the failure of others to buy protection or who didn’t take the appropriate/prudent actions to protect themselves and others.  As a responsible driver, you have auto insurance to protect yourself in the event of an accident. But not everyone is so conscientious.  Although we highlight some disadvantages to UM and UIM we recommend our followers buy these coverages at generous limits within what you can afford – the state minimums may not always be appropriate for you and your family.  The last thing you want to do, is be exposed for the negligence and failure to procure coverage by another party.

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