Underinsured Motorist Coverage Limits – They Are Not What They Seem

Dear Friends,

As you sit here today, do you know what coverage you have if an underinsured motorist hits you? You probably have a lot less than you think!

What you probably don’t know is that your Underinsured Motorist (“UIM”) coverage will only become available to you if your own UIM policy limits are higher than the bodily injury policy limits of the person who hit you. If the person who hits you and you both have 250,000/$500,000 limits, you would get no benefit from your own UIM insurance. You would only be able to collect $250,000 from the other person’s insurance in a settlement or in court for an individual person, or $500,000 among two or more victims. Most people would assume that their UIM coverage is on top of or in addition to the other driver’s coverage, but that is not the case.

In contrast, if you are hit by someone with 20/40 bodily injury limits and you have purchased UIM limits of $250,000 per person/$500,000 per accident, then your own UIM coverage will provide an individual with $230,000 in additional coverage.

You may very well be surprised to learn that increasing your coverage limits for this portion of your auto policy will generally only cause a slight increase in your overall insurance premium. In deciding how much UIM coverage to obtain, please remember that certain medical expenses are required to be paid out of your settlement and typically your attorney’s fees are as well. In a major accident, medical bills can be very high and attorneys’ fees are usually one third of the settlement. For this reason, it is important to obtain the highest UIM coverage that you can afford under your policy. If you don’t, you may be without the insurance coverage that you and your family need at a time when you need it the most. 

As we all begin travelling the roadways more this summer season, there is no better time than today to look at your auto insurance coverage to ensure that you and your family have adequate recourse in the event that any of you are involved in a serious accident and the other driver and/or vehicle owner doesn’t have sufficient liability insurance.

If you work with an insurance agent, your first step will be to contact your agent to discuss your present and prudent coverage levels. If you buy your insurance directly from an insurance company online, then your first step will be to sign in to your online account or call customer service to determine what your coverage is and what action you may need to take to increase your policy’s UIM limits.

Understanding this important aspect of your auto insurance is very important. Finding out that the person responsible for a crash doesn’t have enough insurance is bad, but finding out that you don’t have the back stop of adequate UIM insurance coverage with your own policy is even worse. For your own peace of mind, we strongly encourage you to look at your policy and ensure that your UIM coverage limits provide adequate protection, understanding that many, if not most drivers do not have adequate liability coverage to cover the consequences of a serious accident.

As always, if we can be of assistance to you or someone you know, please contact us!

It would be our pleasure to assist you.

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