Approximately one out of every three drivers on California Roads today is uninsured or inadequately insured. These “uninsured motorists” typically drive the most unreliable and unsafe cars, and are the least careful drivers. Nearly one out of every two-car accidents is caused by an uninsured or inadequately insured driver.
What can you do to protect yourself financially from them?
WHAT IS UNINSURED MOTORIST COVERAGE?
Uninsured (including underinsured) motorist coverage is a part of almost every automobile policy sold in California. Your uninsured motorist coverage is designed to compensate you for a loss which you sustain, and which is caused by a driver who is uninsured, or inadequately insured.
Your insurance company is required by law to include uninsured motorist coverage as part of every automobile policy written, unless you specifically decline it, in writing. Coverage is usually designated on the face page of your automobile insurance policy by the letter or letters “U” or “UM”.
WHO IS INSURED BY MY UNINSURED MOTORIST POLICY?
When you purchase uninsured motorist coverage as part of a policy, it affords coverage for you and all members of your family who reside in your household with you. It would also include any minor children of yours who do not reside with you or your children who are away at college.
You do not have to be an automobile driver or passenger in order to be eligible for benefits. Your automobile UM policy applies even if you were a pedestrian, bicyclist, motorcyclist, or bystander, so long as the motorist who caused your injuries was uninsured or underinsured.
Your uninsured motorist coverage also applies for the benefit of other passengers in your car or other people driving your car with your permission, and who are injured by an uninsured or underinsured driver.
WHEN DOES AN UNINSURED MOTORIST POLICY APPLY?
Uninsured motorist vehicle coverage comes into play whenever anyone who is insured is injured by a driver who is uninsured or underinsured (does not have enough insurance to pay for the damages caused). An uninsured driver includes a hit-and-run driver, so long as there is some actual contact from the hit-and-run driver’s vehicle.
Underinsured motorist coverage only applies if the other driver’s liability limits are lower than your uninsured coverage limits. Thus, if the driver who causes the accident has a liability policy of $30,000.00 per person, you are not entitled to any uninsured or underinsured motorist benefits if your uninsured motorist coverage is for $30,000.00 per person/$60,000.00 aggregate. If, however, you have uninsured motorist coverage of $100,000.00 per person/$300,000.00 aggregate, you could receive up to the $70,000.00 difference from your own company for an injury to one person, and up to $240,000.00 additional insurance from your own company if there were injuries to three or more of your family members, or passengers in your car.
WHAT LOSSES ARE COVERED?
Uninsured motorist coverage is intended to compensate you for both your financial and your non-financial losses which you sustain, and for which you have a legal claim as a result of the negligence of an uninsured, underinsured, or hit-and-run driver. Your financial losses would include any medical expenses which you reasonably required as a result of such an incident, any loss of income or earnings, any diminution in your ability to earn money in the future, or any assorted out-of-pocket expenses such as household and related help and assistance.
Non-financial damages include such elements as loss of ability to enjoy or engage in certain activities as a result of injuries, pain and suffering, and other such subjective losses for which you are entitled to monetary compensation under the law. There is usually no exact way of pinpointing an appropriate amount of compensation for this factor, but insurance people and attorneys are often able to come to an accommodation based upon the severity of the injury, whether it fully heals, what kinds of treatment are necessary and how much time is required in order to achieve an optimum recovery.
HOW MUCH UNINSURED MOTORIST COVERAGE MUST MY INSURANCE COMPANY OFFER ME?
Your insurance company is only required to issue uninsured motorist policy in a minimum amount of $30,000.00 per person/ $60,000.00 aggregate, regardless of the fact that you might be purchasing a much higher liability policy (policy which pays others for their injuries when you are at fault). Furthermore, if your liability policy is less than $30,000.00/$60,000.00, your insurance company will only issue UM coverage in a matching amount. Thus, if you have a $15,000.00/$30,000.00 liability policy, your insurance company will offer uninsured motorist coverage for only $15,000.00/$30,000.00.
However, many, if not most insurance companies will allow you to purchase uninsured motorist benefits in an amount equal to your liability policy. Thus, if you have a $100,000.00/$300,000.00 liability policy for example, you usually will be able to purchase uninsured motorist benefits in that amount as well.
CAUTION: Many insurance companies will automatically issue a $30,000.00/$60,000.00 policy of uninsured motorist benefits when issuing a policy with higher liability limits. If this happens to you, contact your broker immediately and find out how much more it would cost to have your uninsured motorist benefits raised to match your liability policy limit.
HOW MUCH UNINSURED MOTORIST COVERAGE DO I NEED?
This of course is a very personal question, and there is no one correct answer. To some extent, the amount that you need will be tied in to the amount of liability insurance that you can afford.
Also, if you are a high-income earner, and a prolonged injury would substantially impair your earning capacity, you should have substantial UM protection.
In any event, no prudent person should have less than $100,000.00 per person/$300,000.00 aggregate of this sort of protection. Of course, this will mean that your liability policy needs to be written in that amount as well. The cost of purchasing this coverage may be a stretch financially for some people. However, the current situation existing in the State of California, makes an uninsured motorist protection of less than $100,000.00 per person/$300,000.00 aggregate extremely risky and if you can afford it, you should obtain even a higher limit.
Keeping these suggested limits in mind, a good rule of thumb would be – let your uninsured motorist coverage match your liability coverage. Obtain at least as much protection for yourself and your family as you purchase for the protection of others.
For those of you who are homeowners, you might also ask your broker about umbrella policies, which, in addition to providing all sorts of excess liability protection, often offer excess uninsured motorist protection for you as well.