What You Should Know About Uninsured/Underinsured Automobile Insurance
Turn on the television these days and you are guaranteed to see advertisements by local and national insurance companies encouraging you to switch to them for your automobile insurance needs. Each one will tout that they can provide you with the cheapest rates. What they aren’t telling you is that, in most cases, the way they are able to undercut the rates of their competitors is by trimming or cutting back on some of the coverages that you may some day need.
Some of the common ways of doing this include adding a so-called ‘PIP Deductible’ (see blog post by Attorney Claudine Cloutier). Other ways include cutting back on the property damage coverage you may have on your vehicle.
While some of the cuts recommended by an insurance company or agent to reduce your annual premium may be worth considering, there are others that we highly recommend you avoid.
One of the most important coverages you can have on your automobile insurance policy is commonly referred to as ‘UM’ or ‘UIM’, Bodily Injury Caused by An Uninsured Auto and Bodily Injury Caused by an Underinsured Motorist. These coverages are found in Box 3 and Box 12, respectively, of your Automobile Insurance Coverage Selection Page. These coverages are essential if you are injured in a motor vehicle accident that is due to the negligence or carelessness of another driver and the owner of that vehicle failed to maintain either any or sufficient insurance to cover you for the injuries and other damages you suffer as a result of the accident. In such cases, your automobile insurance may step into the shoes of the insurer for the at-fault party to provide you with coverage for your injuries, but only if you have adequate UM coverage.
An uninsured auto is simply that, a vehicle that is not covered by ‘bodily injury’ automobile insurance. An underinsured vehicle is one that has ‘bodily injury’ insurance but the coverage they have is insufficient to pay an injured person for their injuries and damages. The simple fact is that most people tend to purchase the minimum coverage required in order to be able to legally register their vehicle. In Massachusetts, the minimum bodily injury coverage is generally referred to as ’20/40′ coverage ($20,000.00 per person/$40,000.00 per accident). This means that no matter how severe your injuries are and no matter how extensive your economic damages (e.g. lost wages) are, the most that the insurance company will be able to offer you is $20,000.00. This amount could be even lower if there are more than two people injured in the accident with damages each exceeding $20,000.00. This is where the second figure comes into play. The ’40’ part of ’20/40′ means that the most the insurance company will pay out, in total, to all of the claimants involved in a motor vehicle accident is $40,000.00. As a result, if you and three of your friends or family members are all injured in a car accident due to the negligence of another and you all have injuries and damages worth more than $20,000.00, the four of you will be forced to split the $40,000.00 maximum coverage from the at-fault party. In addition, the injured parties may not all receive the same amount out of the $40,000.00 if one or more of the parties are substantially more injured or sustained substantially more economic damages than the others. The $20,000.00 coverage (the number on the left side of the slash) is per person but the amount that you are able to recover may be less as the total coverage for the injuries and damages of all involved parties is capped at a maximum of $40,000 (the number on the right side of the slash) per accident!
As a result, it is essential that you obtain sufficient UM coverage to protect yourself if you are injured by someone who either has no insurance or has insurance that is insufficient to cover your injuries and damages. What you must keep in mind is that UM coverage is only available if the amount of the coverage exceeds the amount of the underlying bodily injury coverage that the at-fault party has on their policy. For example, if the at-fault party has 20/40 bodily injury coverage and you only have 20/40 UM coverage, for all intents and purposes, you have no UM coverage available to you. The amount of UM coverage available to you through your own policy is the amount that your UM coverage exceeds the underlying bodily injury policy. As a result, if the underlying bodily injury coverage is 20/40 and you have 50/100 in UM coverage, the amount of UM coverage available to you through your policy is $30,000.00. If the underlying bodily injury coverage is 50/100 and you have 250/500 in UM coverage, the maximum UM coverage available to you will be $200,000.00. This doesn’t mean that you automatically receive the amount that your UM coverage exceeds the underlying bodily injury policy. You will still need to present sufficient documentation to justify the amount of money that you are claiming.
How much UM coverage you purchase depends on a number of factors including the amount that you can afford and the amount of economic damages that you are able to sustain without receiving compensation for said damages. I always encourage my clients to purchase as much UM coverage as they can afford as this may be the only way for you to recover money in the event that you are seriously or catastrophically injured by someone who either has no insurance or minimal insurance coverage.
It’s also important to remember that even if you have a Homeowners or ‘Umbrella’ insurance policy, these policies will not provide coverage to you if you are injured in a motor vehicle accident. Homeowners policies provide coverage to people injured on your property or whom you may have injured off your property in accidents not involving motor vehicles. More importantly, homeowners policies do not provide coverage for personal injuries sustained by people who are considered ‘insureds’ under the terms of the policy. This typically means people living in the home.
Umbrella policies are available to compensate people whom you may have injured in a motor vehicle accident, but only if you maintain a certain minimum amount of bodily injury coverage for the Umbrella policy to apply. Umbrella coverage will be the subject of a future blog. One may certainly consider reducing their coverage for things like ‘Towing and Labor’ (Box 11), if you have another towing service available to you like AAA; for ‘Collision’ (Box 7), if you are driving a very old vehicle or for ‘Med-Pay’ (Box 6) if you have good health insurance. However, you should always make sure to have a sufficient amount of UM coverage to protect yourself. I recommend at least 100/300 and suggest 250/500 or more if you can afford it. Remember that this may be your only way to recover money if you are injured due to the negligence of another driver.
UM insurance has wide-reaching coverage as well. Even if you aren’t in your own vehicle when you are injured in a car accident, your UM coverage may be available to you. In addition, even if you don’t have a vehicle with UM coverage, the UM coverage of a family member with whom you reside may also be available to you.
One last point about UM coverage: It is crucial that you notify your automobile insurer (or that of a family household member) in a timely manner if you are involved in a car accident. Failure to do so may give your insurer the ability to deny your UM claim if they are able to demonstrate that they were prejudiced as a result of the late notice. What constitutes timely notice and prejudice remains the subject of dispute in Massachusetts. As a result, I recommend that you speak with a qualified personal injury attorney as soon as possible following a car accident. The attorney can make sure that the appropriate notices are sent out and can help you to navigate the potential pitfalls you may encounter when presenting a claim for personal injuries arising out of a motor vehicle accident.
If you or a friend or loved one has been injured in a car accident or would simply like to discuss the coverages on an automobile insurance policy, contact one of the personal injury attorneys at the Keches Law Group for a free consultation.