Understanding UM Coverage: Why Is It So Important?
Let’s say you are in a car accident. What do you do? Ordinarily, you will stop and exchange insurance information with the other driver. If they were at fault, then their insurance company will have to cover your damages.
But what if the other driver did not have insurance? What if the other driver fled the scene of the accident (i.e., hit-and-run)? In these circumstances, you will need to rely on your own UM or UIM coverage. UM stands for uninsured motorist and is meant to cover you in accidents where the other driver is uninsured. This is the simplified version of what it means. You may have heard of UM coverage before, but there are a lot of important aspects of UM coverage that are not widely known but which every driver should understand.
In this article, we will discuss the complexities of UM coverage. We will also discuss its cousin, UIM coverage, which may help you even if the other driver was fully insured.
What Is UM Coverage?
Uninsured motorist coverage is meant to cover you if one of these two things happens to you:
- You get in a collision with an at-fault motorist who does not have liability insurance.
- You get in a collision with an at-fault motorist who flees the scene of an accident, and cannot subsequently be found.
Both of these things – driving without proper auto insurance and leaving the scene of an accident without exchanging information – are illegal under California law. But just because these things are illegal does not mean that they do not happen. All too many drivers lack insurance, and many others choose to flee instead of owning up to their actions. That is why it is so important to protect yourself and make sure to obtain UM coverage for your car insurance.
You see, insurance agents won’t tell you this, because they’re all too focused on selling and making a commission. But statistically speaking, there are tons of drivers around you and only one of you on the road. So the odds of you getting hit are a lot higher than those of you hitting someone. Therefore, YOU MUST PROTECT YOURSELF FIRST AND FOREMOST. We see all too many drivers getting only liability insurance or very small UM coverage that is not adequate to protect your most important asset—YOURSELF.
If you are in an accident with either an uninsured driver or an unfindable hit-and-run driver, and the other driver was at fault for the accident, then your UM coverage will step in and take the place of the other driver’s liability coverage and cover your damages up to the policy limits.
A claim against your UM coverage is known as a first-party claim, because you are filing it against your own insurance provider. This differs from a standard third-party claim, which is filed against someone else’s insurance.
UM coverage is fairly self-explanatory. UIM coverage is a little more complicated but is very important to understand.
What Is UIM Coverage?
The other very important scenario where UM coverage comes into play is when you get in an accident with an at-fault driver who did have insurance, but their insurance policy limits are not enough to cover your injuries. In that case, UM coverage can also play as UIM coverage, meaning it acts as underinsured motorist (UIM) coverage.
“Underinsured” does not necessarily mean that the other driver’s insurance policy was below the legal limit. Even if their insurance met legal specifications, you can still collect damages from UIM coverage, if your UM/UIM limits are higher than the at-fault driver’s liability coverage limits.
In California, the policies do not stack up, so there is no double dipping. For instance, let’s say that the other driver was insured to the minimum liability limits required by the state of California, and they had $15,000 coverage for bodily injury per person in an accident, but your UM/UIM coverage limits are $25,000. And let’s say the costs of your injury matched or exceeded $25,000.
How much will you be able to recover from UIM? Only $10,000. The first $15,000 of your policy will be offset by the other driver’s insurance policy, and you will not be allowed to “double up,” even if the costs of your injury were greater than $25,000. So the most you can recover in this scenario is $25,000 ($15,000 from the at-fault party and $10,000 from your UIM coverage).
Now, let’s say that the other driver’s liability coverage is at $15,000, but your UM/UIM coverage is also at $15,000. In this circumstance, there will still be a $15,000 offset, and you will not be able to collect anything from your UIM coverage, no matter how severe your damages were.
In other words, your UIM coverage must be higher than the liability coverage of the other driver in the accident for you to be able to collect under your UM/UIM policy. If you buy UM/UIM coverage that is equal to the legal limits for liability insurance, then you will typically not be able to collect anything in UIM. This means that if your UM coverage is minimal you will never be able to use it as underinsured coverage but only as uninsured coverage, which again stresses the importance of having good uninsured motorist coverage adequate the most important asset you have, which is yourself.
Why UM/UIM Coverage Is Underrated
Many drivers underestimate the importance of UM and UIM coverage. When people buy auto insurance, they often think primarily of liability insurance, which is meant to protect other drivers on the road from any accidents caused by the covered driver. However, it is surprisingly rare for clients to think about how best to protect themselves from other drivers.
After all, there is only one of you, and there are millions of other drivers on California roads. The chances that one of them will hit you are far greater than the chances that you will hit any particular one of them.
To make matters worse, insurance companies do not typically explain the importance of this type of coverage to their clients.
You’d think that insurance companies would be eager to sell you as much insurance as possible, but in fact, insurance salespeople get paid more for selling a large quantity of insurance policies than they do for selling fewer high-quality ones. As a result, they generally sell customers the cheapest insurance policy possible, which doesn’t typically include UM/UIM coverage.
When you are on the road, protecting the drivers around you is not enough. You need to give some thought to protecting yourself, and that is exactly what UM/UIM coverage is designed to do.
Why UM/UIM Coverage Is Particularly Important in California
Uninsured and underinsured motorist coverage are mandatory for all drivers in a few states, but they are optional in California and you can waive it. Many insurance applicants are not explained that that’s the case and are not even aware that they are waiving this very important coverage. There are a few reasons why this type of coverage is especially important for Californians to have.
First, the risk of getting in a collision with an uninsured motorist or a hit-and-run driver is very high in California.
According to the Insurance Information Institute, over 15% of California drivers, or more than one in seven, are uninsured. This is a rate higher than the national average. With regards to hit-and-run crashes, the American Automobile Association estimates that nearly 12% of all crashes (or almost one in eight) are hit-and-run collisions, leading to around 140,000 injuries and 2,000 deaths annually.
California is one of the worst states for hit-and-run crashes, but the rate of hit-and-runs is even higher in some areas, and Los Angeles is particularly bad. By some estimates, half of all auto accidents in Los Angeles involve a hit-and-run (many involving parked cars). If you are driving on California roads, an encounter with either an uninsured motorist or a hit-and-run driver is much more likely than you may think.
Second, the minimum liability insurance limits required by California are outdated, and have not kept pace with inflation.
In California, the minimum legal limits for liability coverage are $15,000 per person for bodily injury, $30,000 per accident for bodily injury, and $5,000 for property damage. This is sometimes abbreviated as $15,000/$30,000/$5,000.
By requiring drivers to buy liability coverage, California is no different from almost every other state in the country. The problem is that California’s insurance limits have not been updated to keep pace with inflation in many years, and as a result, they are lower than those of many other states and are not nearly enough to cover all the expensive medical care that an injured person requires.
To compare California with a few other big states:
- Illinois has limits of $25,000/$50,000/$20,000
- New York has limits of $25,000/$50,000/$10,000
- Texas has limits of $30,000/$60,000/$25,000.
Those are just a few examples. But most other states’ limits are similarly high.
If you’re a Californian reading this, you might be feeling shortchanged. And sure enough, these low limits are bad news if you get in an accident.
Take the bodily injury limits: if you suffer a serious or even moderate injury, medical bills will likely be a lot more than $15,000. The initial ambulance ride to the hospital will likely cost several thousand dollars alone, and that’s not counting any subsequent treatments. Similarly, when it comes to property damage, the cost of repairs often exceeds $5,000. But once you have exhausted the other driver’s policy limits, you will have little recourse against them for either of these.
This means that if you want your UM/UIM coverage to be effective, you should buy it at a rate significantly higher than the $15,000/$30,000/$5,000 limit. Unfortunately, all too many people in California either don’t have any or have only the minimum UM/UIM coverage. By purchasing higher limits, you have the potential to greatly increase the amount of insurance money that you are eligible to recover in an accident, even if the other driver was fully insured. This is important everywhere, but perhaps nowhere more so than California.
The Right Amount of UM/UIM Coverage
So, how much UM/UIM should you buy?
We recommend that all our clients buy at least $50,000 in UM/UIM coverage for bodily injury. Even this is low, considering how expensive some injuries can be. Ideally, it is best that you buy $100,000 in UM/UIM bodily injury coverage, or even more. Medpay coverage is also important and we recommend all our clients to get at least $10,000 in medical coverage on their car insurance policy.
This extra insurance will raise your monthly premiums, but not by a lot. Most likely, you will be able to easily afford this bump, and if you get in an accident where you need your UM or UIM coverage, then you will probably be the first to agree that the price was well worth it.
If you have been injured in an accident, don’t delay, contact the Law Offices of Jennie Levin, P.C. right away. We will do all that we can to help you. Also, if you found this article interesting and you believe that your friends would be interested in learning more about this, then share on Facebook, Twitter, and other social media. Finally, feel free to leave us a comment, and let us know what questions you would like us to answer next!