You’re a responsible driver – so you’ve likely never thought about what would happen if you were to be hit by an uninsured (UM) or underinsured (UIM) driver. But did you know that 1 in 8 drivers are uninsured, causing $2.6B in insurance claims? That accounts for almost 13% of drivers.
You may not think this affects you since you’re properly insured– especially if you’re reading this blog. However, let’s learn more about what UM/UIM Insurance is and how it can benefit you.
What is UM/UIM all about?
Even though they’re often mentioned together, they’re in fact, two separate types of coverage designed for specific types of claims.
Uninsured motorists (UM) coverage provides insurance coverage when an uninsured, at-fault driver injures you or someone else who is covered under your policy. This includes coverage for a hit-and-run accident so long as there was contact with the hit-and-run car. UM insurance also provides coverage for property damage. In a hit-and-run wreck, however, the other driver must be identified in order to claim UM property damage coverage.
Underinsured motorists (UIM) coverage covers you when an underinsured, at-fault driver injures you or someone else who is covered under your policy. UIM coverage does not provide protection against property damage.
An underinsured motorist is a driver whose liability limits are less than the limits of your UIM coverage and whose insurance cannot cover the losses to the injured.
For example, the minimum required coverage for auto insurance in New Jersey is only $15,000. Considering that many consumers have been trained to find coverage “in 15 minutes or less”, if you’re injured in an accident and the other driver is at fault, then you might only receive the minimum required coverage of $15,000.
UIM will help cover the gap between what’s exhausted on their limited (or non-existing) policies and your medical bills, lost wages, property damage, etc.
Example: After being involved in an accident with another driver you find out from their insurance company that they did not carry any insurance. You then submit your damages totaling $10,000, to your own company for reimbursement under Uninsured Motorist. Your company investigates the claim and determines that the uninsured driver was 80% at-fault for the accident and you were 20% responsible. Under these circumstances, your company would be responsible for 80% of your damages up to the limits on your policy, or $8,000, and would end up paying you $7,500 after applying the $500 policy deductible.
Tomorrow’s Peace of Mind at an Affordable Price Today
Even though UM/UIM isn’t mandatory we highly suggest requesting the price to add it. UM/UIM coverage tends to come at very affordable premiums — much less than you’d pay for standard bodily injury and property damage coverage.
According to a 2016 roundup of insurance quotes from ValuePenguin, purchasing additional UM/UIM coverage of $100,000 per person and $300,000 per accident usually costs between $86 and $134 a year, depending on your insurer.
UM/UIM coverage is ultimately designed to protect you from the many drivers out there without sufficient insurance coverage.
Never settle for the bare minimum coverage at the cheapest rate. If you find yourself the victim of someone else’s recklessness, opting to purchase additional coverage now will give you the peace of mind of you need tomorrow today.