As a follow up to our last post about PIP coverage, another rather inexpensive coverage that is available to you when purchasing automobile insurance is “uninsured / under-insured motorist coverage,” or more commonly called “UM/UIM coverage.”
UM/UIM coverage may be even more important than PIP coverage and here’s why: State law requires that every driver carry at least $30,000 in liability coverage. However, according to the Texas Department of Insurance, 1 out of every 5 vehicles (or 20%) is uninsured!! Austin averages nearly 24,000 car wrecks per year which equals 1 out of 80 cars on the road, and a wreck occurs in Austin about every 22 minutes (I heard those statistics on the radio the other day). That’s a bunch of wrecks and one of them could be you.
UM/UIM coverage is there to protect you in the event you are in a wreck with an uninsured driver (uninsured motorist coverage) or in cases where your damages exceed the limits of the other driver’s policy (under-insured motorist coverage). To make it more clear, let’s look at two scenarios based on the following facts:
Let’s say you’re driving to the grocery store. Some guy (we’ll call him Jack) runs a red light and hits your vehicle. You are injured as a result and require fairly extensive medical treatment of about $45,000 (believe it or not that is not that much in medical treatment!). Jack has no job and no money.
Scenario 1: Jack doesn’t have auto insurance: If you have UM/UIM coverage, you can make a claim on your insurance policy to cover your medical bills, lost wages, and property damage. In this scenario, the fact that Jack is uninsured is irrelevant and you are protected because you have UM/UIM coverage.
Scenario 2: Jack has minimum coverage of $30,000: So, Jack has the minimum coverage and his insurance carrier pays you the $30,000. But your medical bills alone are $45,000 without taking into account your lost wages or property damage. If you had UM/UIM coverage, you could make a claim on your policy for the amount of your damages in excess of the $30,000 that you received from Jack’s insurance carrier. In other words, you could make a claim on your policy for the$15,000 in medical bills that wasn’t covered by Jack’s liability policy.
Without UM/UIM coverage (and Jack not having any money), you would be responsible for either the whole $45,000 in medical bills or the $15,000 not covered by Jack’s policy. With 20% of driver’s being uninsured, it just makes sense to protect yourself by asking your insurance carrier about UM/UIM coverage. It’s not that expensive and could be invaluable should you be unfortunate enough to be involved in a car wreck.
If you have questions about your automobile insurance policy, feel free to contact us and we’d be happy to discuss it with you.