The Uninsured Epidemic: What Happens if an Uninsured Driver Hits You?
Driving may be the most dangerous activity you do consistently. Yet, the only way to avoid the risk of having an accident is to not drive, and for many of us, that’s simply not an option. What we can do, however, is protect ourselves from the financial consequences of an accident. Whether it’s paying for our own damages or someone else’s, car insurance is an essential form of coverage to protect us against these risks.
Unfortunately, while most states require auto insurance — all except New Hampshire and Virginia — roughly 14-percent of drivers in the United States are putting others at risk by driving without having any form of auto insurance. That may not seem like a lot of drivers, but the discrepancies between states can be huge — New Mexico, for example, has a whopping 20-percent of drivers without auto insurance.
Whatsmore, many drivers only carry their state’s minimum coverage, which usually sits between $15,000 and $30,000 for personal injuries of a single person, $30,000 to 50,000 for all personal injuries and $10,000 to $25,000 for property damage.
Imagine that you’re severely injured in a crash by an underinsured driver and you need serious medical care and can’t work. Or imagine your vintage or late-model luxury vehicle is totally destroyed in a crash with an uninsured driver. If you don’t have Uninsured Motorist Insurance, you will end up paying for these costs out of your own pocket — even if the accident wasn’t your fault.
What’s more alarming than these statistics is that not all states require drivers to purchase Uninsured Motorist Insurance, leaving many who are unaware of the risks open to serious liabilities. Here, we wanted to break down just what this essential coverage is and why you need it.
How Does Uninsured Motorist Insurance Coverage (UM) Work?
Uninsured motorist coverage is for situations where the at-fault driver of an accident does not have any car insurance. This doesn’t mean that you can’t sue the uninsured driver that hit you. But, if you sue them to recover damages for your personal injuries or vehicular damages, it’s unlikely you’ll get anything, often because they don’t have the funds to pay up.
By having UM coverage, your insurance company will pay for your personal injuries and property damages, up to the limit you purchase, should you be unlucky enough to become involved in a car accident with an uninsured driver. Without UM coverage, you can expect to pay for most of your own medical bills and vehicle repair costs out of pocket.
How Does Underinsured Motorist Insurance Coverage (UIM) Work?
Underinsured motorist coverage (UIM) applies to accidents where the at-fault driver has car insurance, just not enough to cover your losses. Let’s say you’re driving through Aspen and are rear-ended by a drunk driver who is 100% at fault for causing the accident. Your damages total $20,000 in vehicle repairs and $40,000 in medical costs. However, the person who hit you is only carrying state minimum coverage as required by Colorado law.
Without UIM coverage, you will only get $15,000 to repair your vehicle and $25,000 for your medical bills. What the other driver’s car insurance won’t cover is up to you to pay for out of your own pocket.
In some cases, UIM insurance and UM coverage are offered together as a single coverage line item.
Tips from the experts
To give you insight on the importance of this coverage, we spoke with two different kinds of experts. First up was Bob Klee, Kelly Klee’s President, who tells us that often clients don’t have this essential coverage — or enough of it — based on bad advice from their insurance advisor.
We also reached out to Rob Baskerville, a top 100 nationally-ranked attorney from New Mexico who specializes in auto-accidents, personal injuries and wrongful death claims for his clients. Baskerville isn’t in the insurance business, but he has seen first-hand how negatively an auto accident with an un/under-insured driver can affect a person’s life and livelihood.
“As a car accident lawyer, I thoroughly investigate the many different potential sources to compensate my injured clients,” Baskerville explained. “Sadly, if the at-fault driver doesn’t have any liability insurance and the victim doesn’t have any uninsured motorist coverage, the result is often that the victim may have to pay out of pocket for their medical treatment and other resulting bills.”
From both an insurance and legal point of view, both Klee and Baskerville agree this form of insurance is totally essential for drivers, and these are the 5 things they both want all drivers to know.
- Even if you have health and disability insurance, UM insurance is necessary
“An injured person’s health insurance may cover some of their medical expenses. However, most of today’s health insurance plans require a patient to pay large amounts of money for deductibles, co-pays, co-insurance etc,” Baskerville explained. “Also, the health insurance will only pay for covered medical expenses but it will not pay for other types of damages, such as pain and suffering, which are usually worth significantly more than the medical expenses.”
Klee also gave us a great example of why UM is needed even if you have other forms of insurance coverage. Let’s say you’re a neurosurgeon and you’re hit by an uninsured or underinsured motorists and seriously injured in the crash. Health insurance only pays medical bills for the doctor and hospital, and even the best disability insurance will only pay up to 65-percent of your monthly income for 36 months.
If you lose your ability to work for a year while you recover, or worse, can’t go back to work, you’re left with a massive burden. “Uninsured Motorists Insurance can help by giving you a lump sum to help with pain and suffering, medical bills and that loss of wages that just isn’t covered by disability.”
- You need to file your claim as quickly as possible
“It is very important to take certain steps after a collision such as calling the police to get officers to investigate and write a police report,” Baskerville explained. “The sooner the investigating police officers, attorneys and insurance companies can confirm that the at-fault driver doesn’t have insurance, the sooner the victim can confirm that they can use any available uninsured motorist coverage.”
However, when dealing with an underinsured driver, you may not realize their insurance limits until your medical bills start adding up. Klee says when you realize they don’t have enough coverage, it’s important you get in touch with your UM/UIM insurance provider right away so that you can be covered.
- An advisor is key to navigating the process
“You want to work with an advisor who can help you get the right amount of coverage you need,” Klee told us. Your advisor can help you with assessing your entire portfolio, as well as helping make sure you buy the right amount of coverage. For example, often drivers think they can buy an excess of UM and UIM insurance; but, it actually can’t exceed the amount of liability coverage you already have.
“So if you have $50,000 in liability coverage, you can’t get more than $50,000 in UM or UIM coverage,” Klee explained. “Insurance companies do this to incentivize policyholders to purchase more primary coverage instead of buying state minimum liability coverage, then loading up on UM and UIM coverage.”
- It’s not only inexpensive, it’s worth the investment
Klee told us that, too often, the reason people avoid UM/UIM insurance is that they get bad advice about pricing. “A lot of standard market insurance agents have this gut feeling it’s all about the price, so rather than sell the value of why you might want this coverage, they just say show me your current insurance and we’ll match it and maybe save you $250 bucks, instead of taking a hard look at your needs.”
Baskerville agreed, telling us that, “…people improperly assume that uninsured motorist coverage will cost too much and isn’t a good value but, in reality, the increase in premium is usually modest and well worth it.”
- At the end of the day, it is necessary
Both Klee and Baskerville told us that they always advise uninsured motorist coverage. “I advise our clients to buy as much as their Umbrella limit — not just the required limit on your auto. So if you have a $10m Umbrella, you should have $10m uninsured and underinsured coverage. Most of the standard market carriers do not offer an endorsement on umbrella policies for UM/UIM,” Klee explained.
Get in touch with our team to review options with a Kelly Klee coverage advisor.