In order to appreciate the benefits of UM/UIM coverage, it’s essential to understand the different types of coverage available to motorists.
Uninsured/Underinsured (UM/UIM) Motorist Coverage
These policies are intended to cover the medical bills, pain and suffering, and wage loss claims incurred from an accident in which the at-fault driver either didn’t carry any liability insurance or didn’t carry enough liability insurance to cover the injured parties’ expenses.
Uninsured coverage also covers “phantom vehicles”, or situations in which you are injured by an unidentified driver’s negligence. This can occur either because the negligent driver fled the scene of the accident, or because they were not aware they caused an accident and therefore never stopped.
In short, this insurance protects you and your family against injury caused by other drivers. Wisconsin law requires drivers to carry a minimum of $25,000 per person and $50,000 per accident in uninsured (UM) coverage. Although underinsured (UIM) coverage is considered optional, it is highly recommended that drivers carry a high UIM policy, as well as UM limits in excess of the statutory minimums. The more coverage you purchase, the better you are protected against uninsured and underinsured drivers.
Many people devalue the importance of UM/UIM coverage because they consider liability protection as essential automobile coverage. Due to an unstable economy, lack of concern, or a host of other reasons, some people choose not to purchase or maintain even basic liability policies. Many others purchase only the bare minimum.
The Insurance Research Institute estimated that in 2010, roughly 1 out of every 6 drivers was uninsured. That leaves you with a 16% chance of being struck by an uninsured driver. In the context of life-altering events, that is a very high percentage.
So, what happens if you are in that unlucky 16%?
If you do not have UM coverage, the only way to pursue an uninsured at-fault driver for uncompensated damages is in civil court. That process can be time-consuming and costly—both financially and emotionally. It also comes with a very low collection rate. Because many uninsured drivers choose not to purchase insurance for financial reasons, it is unlikely they will be able to compensate you for damages, even if you win your case.
Health Insurance isn’t enough. Depending on the severity of your accident, your medical bills could run into the tens of thousands of dollars or higher. Regardless of the cause of your injuries, you will be required to pay co-pays, often lofty deductibles, and any other costs dictated by your policy. In addition, you may be further limited by which providers you can choose for medical care. That’s not to say health insurance is a bad option under these circumstances. It just shouldn’t be your only option. UM/UIM coverage will pay for related medical expenses regardless of the terms of your health insurance policy.
Determining how much UM/UIM insurance you’ll need is a matter to be discussed with a qualified insurance agent, or evaluated on a personal basis. Facts to take into consideration include what type of medical and disability insurance you have, the value of your vehicle, and your income. Answers to these questions could increase or decrease your need for a higher UM/UIM policy.
Disclaimer: The information contained in this blog should not be construed as legal advice. It is for informational purposes only. Additionally, each state possesses individual and at times differing laws regarding similar subjects. Please contact a licensed attorney in your state to discuss information specific to you and your case.