Why uninsured / undersinsured motorist coverage is important to you!

This article addresses common questions and issues regarding the necessity and operation of uninsured/underinsured (UM/UIM) motorist insurance coverage. This article does not constitute legal advice or an offer of representation from Orr & Brown LLP or any of its attorneys.

Why do I need UM/UIM coverage anyway?  

The modern roadways are a dangerous place! Not only are America’s highways increasingly crowded as population growth has outpaced our ability to fund and build new roads, but the use of cell phones and in-car technology has resulted in an explosion of “distracted driving.” How many times a week behind the wheel do you find yourself thinking: “Put down that cell phone and drive!”

Obviously, your greatest protection against unsafe drivers is diligence behind the wheel and safe driving practices (e.g., wearing a seat belt, obeying posted speed limits). However, there are times when no amount of diligence on your part can protect you from other drivers on the roadway. When accidents happen, the type and extent of your motor vehicle insurance coverage becomes critical.

Most people think of insurance in two ways:

1. “If I wreck my car and it’s my fault, is it covered?”; and

2. “If I hit someone else and it’s my fault, I don’t want to get sued. Do I have enough coverage?”

The question that most drivers do not consider, and the one that can be much more important for safe drivers with good records is this:

3.”If someone hits me, takes me out of work, causes me serious injury and medical bills, who is going to pay the bills?”

Drivers in Georgia are only required to carry “liability” insurance, or insurance that covers property damage and bodily injury ofothers in the event the driver causes a wreck. The minimum required limits of liability insurance for bodily injury in Georgia are $25,000 per person and $50,000 per collision. These limits can be woefully inadequate in the event of a wreck causing serious injuries. For property damage, the minimum limits are $25,000. That means that the most the insurer who issues a minimum limits policy will pay, no matter how bad your injuries may be or how much your car may be worth, is $25,000 to you for personal injury and $25,000 to cover damage to your car or other property. That is why liability insurance does little to address question “3.” above. Unless a driver waives UM/UIM coverage or reduces the limits under the policy (always a bad idea, for the reasons discussed below), the UM/UIM coverage under the policy equals the liability limits.

Most people think of “uninsured motorist” coverage as insurance that covers them only if they are hit by someone with no insurance. However, according to this source, only 12% of drivers on the road in Georgia have no insurance. It is likely that a far far greater numbers of drivers have insurance, but only in the minimum limits the law requires (see above). Given that rates are generally higher for unsafe drivers with poor driving histories, this means that the most dangerous drivers on the roadways are most likely the ones that carry the minimum limits (i.e., the cheapest policy). When they cause bad collisions, drivers with minimum limits are what lawyers refer to as “underinsured.”

How does UM/UIM coverage work?   

Imagine that you are driving to the grocery store on a fine spring afternoon and a driver with the minimum required insurance limits pulls out in front of you, causing a wreck. Unfortunately, you break your leg in the collision, which will put you out of work for two months and cause you to lose $8,000 in wages. If a surgery and hospitalization is necessary to repair your leg, your medical bills (surgery, hospital, doctors, follow-up, therapy, devices, etc.) could easily total $50,000 or more. In this situation, the driver who hit you is not “uninsured,” he is “underinsured.”

When you get home from this terrible ordeal, you get out the big envelope full of insurance information that your agent sent you when you bought the policy a couple of years earlier and remember that, to save $100 on the premiums, you had selected “setoff” or “reduction” UM/UIM limits. You call your agent, who explains that this means that the policy limits of the driver who hit you will be deducted from your UM/UIM limits, meaning that you have zero uninsured motorist coverage for the collision. i.e., what little coverage you did have is “setoff” against the limits of the other driver’s liability coverage. In this situation, even if the other driver’s insurance company promptly “tenders its limits” and writes you a check for $25,000 for your bodily injuries you are still out $33,000 for your medical bills and lost wages ($50,000 for medical bills plus $8,000 for lost wages, minus the other driver’s $25,000 policy limits).

How do I protect myself against other, unsafe drivers on the road?  

Pay very close attention to your UM/UIM coverage limits and the type of policy you have. Especially if you do not have significant personal assets to protect in the event you hit someone else and they file a claim against you, your UM/UIM coverage is much more important in protecting you from the likely losses associated with a car wreck.

Thanks to recent changes in Georgia’s UM/UIM law, drivers can now choose between “excess” and “reduction” limits. The above illustration shows how reduction or “non-stacking” limits operate. If you had excess, or “stacking” limits in the same situation, your UM/UIM limits would have “stacked” on top of the other driver’s liability limits, giving you $50,000 in coverage for your lost wages and medical bills and $50,000 for damage to your vehicle. That means that all but $8,000 of your lost wages and medical bills would be covered ($58,000 in losses versus $50,000 in coverage).

The difference in cost between stacking and non-stacking coverage is usually minimal, but as you see, the difference in coverage can be dramatic. So, one excellent way to protect yourself against losses caused by unsafe drivers is to ask your insurance agent to modify your existing policies so that you have “excess” UM/UIM coverage. 

Also, buy as much UM/UIM coverage as you can comfortably afford.  Never, ever, under any circumstances, waive or reduce the limits of your UM/UIM coverage. Given the dangers present on the modern roadway and the losses that dangerous drivers can impose on you through no fault of your own, as a matter of safety and for your family’s economic well being, UM/UIM insurance coverage is no place to cut corners.

Do I have to be in my covered vehicle for the coverage to apply?

No. In the case of individual policies (business policies are different) UM/UIM coverage applies to any injuries caused by an uninsured or underinsured driver regardless of whether you are driving your vehicle or standing in your front yard watering your grass. The coverage does not require that you be in your covered vehicle for it to apply.

What do I do about my UM/UIM insurance coverage if I get into a wreck? 

If you are in a car wreck, regardless of who you think was at fault, it is always a good idea to put your carrier on notice of the wreck as soon as you can. That way your insurer will not be able to try and avoid coverage by claiming you did not give them timely notice. Read your insurance policy and see what it says about how to notify the carrier. There will usually be a 1-800 number on the back of your card for reporting a claim. Some policies have strict deadlines for notification that have to be met. Do not let a simple phone call with your agent or a friend keep you from fulfilling your duty to notify your carrier under the policy. If you choose to have an attorney represent you (almost always a good idea, especially in cases of serious injury), get your coverage information to your attorney and have her notify your insurer within any applicable deadlines.

If you have an attorney, promptly provide your attorney with all insurance policies that you have on any motor vehicle in your household. This means cars, trucks, RV’s, motorcycles, boats, or any other vehicle that you insure.  The reason why is that UM/UIM policies stack on top of one another. Thus, in our above example, if you had “excess” coverage on your car and a motorcycle in the garage with “excess” UM/UIM limits of $25,000, you would have had a total of $75,000 of coverage for bodily injury (the other driver’s $25,000 in liability coverage, plus $25,000 in UM coverage on your car, plus $25,000 UM coverage from your motorcycle policy.

Do not let the fact that your UM/UIM carrier is “your” carrier fool you. In this situation, your insurance company is essentially in an adversarial posture and is likely looking for a reason not to cover your injuries. As always, the best advice is to hire an attorney. While you must comply with the provisions of your policy regarding providing information to your insurer and you must cooperate with your insurer in any event, if you have an attorney, coordinate all statements and disclosures of information (e.g., telephone statements) through her to protect your rights.

If you have any questions about UM/UIM coverage that are not answered above, feel free to contact the attorneys at Orr & Brown LLP at 770.534.1980.

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