11
Dec
ARE YOU INSURING OTHERS MORE THAN YOURSELF? AUTO INSURANCE ADVICE
Sounds like a stupid question, I know. But take out your automobile insurance policy, and look at the section entitled Liability. Now look at the section entitled UM/UIM. Are these two sections equal? If not, then it is time to make some changes.
Liability
Liability coverage is for other people. If you are responsible for an automobile accident, and you injure another person, your insurance company will pay up to that amount to that person. If you are wondering how much liability coverage you should have, I would recommend that you speak with your insurance agent and/or accountant or other professional person who might help you assess your risk. However, keep in mind that no money under your liability coverage insures you for injuries you might sustain in an accident.
UM/UIM
These are actually two different types of insurance. UM stands for uninsured motorist coverage. If you are injured by a driver who has no insurance, or you are injured in a hit and run, your UM coverage “steps into the shoes” of the uninsured/hit and run driver. In other words, if you are injured and there is no other insurance out there, you are protected by your own insurance.
UIM stands for underinsured motorist coverage. Similar to UM, UIM protects you from individuals who have very little insurance. If a person who injures you in an accident has too little insurance to cover you for your injuries, your UIM coverage will step in and cover you up to the amount listed. Keep in mind that this coverage is not in addition to the other person’s liability coverage. Your UIM carrier gets a credit for everything you recover.
Why is this important?
I’ll give you an example. Recently, I saw a policy that had $300,000 in liability coverage, but only $35,000 in UM/UIM. Let’s call the person with this policy Denise. If Denise were in an accident in which she was seriously injured, Denise is exposed to a significant lack of coverage. What if the defendant has only $15,000 in liability coverage? (We already know that the defendant’s liability policy will pay Andy for his injuries). That means the maximum amount of recovery would be $35,000 ($15,000 + $20,000), as your UIM carrier gets a credit for any amount recovered in the underlying action. What if Denise injured someone else? Then, that stranger would have $300,000 in coverage from Denise’s policy.
Please make sure you are fully covered via UM/UIM. You need to insure yourself just as you do others when it comes to auto insurance. So if those numbers do not match, call your insurance company immediately and change your coverage.
[…] pink wrote an interesting post today onHere’s a quick excerptPlease make sure you are fully covered via UM/UIM. You need to insure yourself just as you do others when it comes to auto insurance. So if those numbers do not match, call your insurance company immediately and change your coverage. […]
January 8th, 2008 at 6:34 pm[…] splogger wrote an interesting post today onHere’s a quick excerptPlease make sure you are fully covered via UM/UIM. You need to insure yourself just as you do others when it comes to auto insurance. So if those numbers do not match, call your insurance company immediately and change your coverage. […]
January 9th, 2008 at 10:55 am