Accidents happen. And while most states require drivers to maintain auto insurance, according to a 2015 study by the Insurance Research Council (IRC), one in eight motorists remain uninsured. The IRC study indicates that the magnitude of the uninsured motorist problem varies widely from state to state. Add to that the number of drivers who only carry state minimum auto limits, and it’s enough to make a person want to stay off the road for good.
Unfortunately, many people wrongly assume that auto and umbrella insurance policies will provide reimbursement for all aspects of an accident on the road. Instead, both of these policies cover your own liability and provide compensation to others in the event that you are responsible for an accident. However, if another driver causes an accident and doesn’t have enough insurance coverage to compensate you, your own auto or umbrella policies won’t be enough.
If another driver doesn’t have enough insurance coverage to pay for your medical bills, you could face extremely high costs or lengthy court battles. However, by purchasing stand-alone uninsured (UM) or underinsured (UIM) motorist coverage—or by adding the coverage as an endorsement to your umbrella policy—you can be fully protected on the road.
Why Isn’t There Coverage?
Auto insurance is required in most states because all drivers on the road essentially put their trust in one another to not get into an accident. As a result, your regular auto insurance policy will reimburse another driver if you are the cause of an accident. In a similar way, umbrella policies provide you with excess coverage for a number of different personal liabilities.
However, if another driver doesn’t have enough coverage to fully pay for the damage of an accident, you could be left to pay the bills yourself.
- Uninsured motorists simply don’t purchase an auto insurance policy. As a result, if they cause an accident, there isn’t a policy in place to reimburse you for medical bills. According to the Insurance Research Council, about 1 in 8 drivers in the United States are completely uninsured.
- Underinsured motorists have an insurance policy, but don’t have a high enough coverage limit to pay for all of the expenses of an accident. Some states only require a small amount of coverage, which won’t be enough to pay all of your medical expenses.
It’s also important to know that hit-and-run accidents—those in which a driver flees—fall into the same category as uninsured motorists, as there is no insurance policy in place to cover the driver’s liability.
To protect yourself from these risks, it’s important to talk to your Marshall & Sterling representative about a stand-alone policy or an endorsement to your umbrella coverage.
Coverage Specifics
Without UM or UIM coverage, you’re essentially paying more for the protection of strangers than you are for yourself and your family. And, although uninsured and underinsured drivers are all too common, many people believe that they’re already covered if someone else causes an accident.
Knowledgeable and Trustworthy
Most insurance ads these days are focused on getting a cheap rate, and drivers are besieged with ads encouraging the purchase of “state minimum” auto limits in order to save money. We understand that can be tempting in a struggling economy, but it can also do more harm than good if you are in a serious accident with one of those under-insured drivers. Our team understands state automobile policy coverage requirements and will work with you to find the right coverages and limits that minimize your uninsured or underinsured exposures on the road. Start a conversation with our team to learn more abut adding this additional layer of protection to your policy.
Mrs. Policyholder was on her way to work when she was rear-ended on the highway, causing her to run off the road and into a concrete barrier. She sustained multiple internal injuries, including a severely fractured ankle, which led to months of treatment and an infection that required additional hospitalization and more surgery. Unable to work during her recovery, she lost over $100,000 in income while racking up medical bills of over $120,000. She was no longer able to walk long distances or enjoy many of her favorite activities, impacting her life significantly. It was soon discovered that the driver of the other vehicle had state minimum limits of only $10,000 per person/$20,000 per accident. Mrs. Policyholder was paid the full $10,000 available, but the other driver had no other insurance and no assets.
Mrs. Policyholder had UM/UIM limits of $250,000 per person/$500,000 per accident under her own auto policy, as well as $1M of UM/UIM coverage under her personal umbrella policy. She was able to recover the amount from her own insurors that she would have been entitled to recover from the other driver, had he carried enough insurance. If she hadn’t purchased UM/UIM coverage, her payment would have been only the $10,000 policy limit of the other driver.
Source: Why You Need to Offer Excess UM/UIM to Every Client by April Shrewsbury – Big “I” Umbrella Program Manager
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