19 Aug 2015
Some states require drivers to carry uninsured/underinsured motorist insurance, also known as “UM insurance.” Louisiana is not one of those states. Even though our state does not require uninsured/underinsured motorist, I strongly recommend you get it anyway. Why? Because when another at-fault driver hits you and doesn’t have enough insurance coverage to pay your damages, your UM insurance covers your damages up to your limits of coverage. Looking at the chart above, do you really want to take the chance of an at-fault driver having insurance? You do not want to be stuck with those bills, protect yourself. WHEN YOU MAKE A CLAIM AGAINST YOUR UM INSURANCE, YOUR INSURANCE RATES WILL NOT AND CAN NOT INCREASE BECAUSE OF IT. I have encountered some individuals who pay premiums for UM insurance and when they have an opportunity to use it, they refuse to do so based on a myth that their insurance rates will increase. If you will not use it, save the money and not get UM. However, I would highly recommend obtaining UM insurance and using it when necessary.
Examples of How UM Works
Say you get into into a car accident where you suffer $100,000.00 ($25,000 of which is medical providers bills) in damages and the other, at-fault, driver only has $10,000.00 in bodily injury insurance (the insurance which pays for your medical bills, lost wages and pain and suffering), or even none. Here is how the scenario would play out if:
A. You Have No UM Insurance
You collect $10,000.00 from the other driver’s insurance, leaving you with $90,000.00 in unpaid losses, either $15,000 or $25,000 (if other driver had no insurance) owed to medical providers. If you do not have health insurance, you can actually wind up still owing your medical providers a lot of money. Sure, you can get a judgment against the other driver for the excess $90,000.00, but most people won’t have any money to pay that judgment, especially people who only have $10,000.00 in bodily injury insurance or no insurance at all.
B. You have $25,000.00 in UM insurance
In this scenario, you would recover under the underinsured motorist portion of your UM coverage.
You collect $10,000.00 (if they had insurance) from the other driver’s insurer, and $25,000.00 (your policy limit) from your UM insurer. You still come up short 65,000.00 which, while not as bad as example A, will leave you wishing you had more UM coverage. In this example, you will recover enough to pay the medical bills. You will have either $10,000 or $0 (if other driver had no insurance) after paying the medical bills. $0 is better than a debt of $25,000, but you are not compensated for the injuries you suffered, including any loss wages.
C. You Have $100,000.00 in UM insurance
You collect $10,000.00 (if they had any) from the other driver’s insurer and $90,000.00 from your UM insurer. Why not $100,000.00? Because you only had $100,000.00 in total damages, and you are now fully compensated. Feel good about yourself for having the right amount of coverage.
In this scenario, you have enough to pay the medical providers. From that, you have a balance of either $65,000 or $75,000. Now, if you had to miss work, you can be compensated for that. The pain and suffering you endured, you are now paid for it. You are now able to be "made whole" after the accident. Instead of having a debt with the medical providers, you actually could walk away with a nice lump sum payment to compensate for what you had to go through.
Your UM Coverage Travels With You
One nice feature about UM is that it covers you even if you get into an accident in someone else’s car. So, even if you are a passenger in your friend’s car and you get in an accident, your UM will cover you. Obviously, you should read your policy to determine who is covered (family members who live with you, for example) and under what circumstances (some exclusions may apply).
Be Covered Now or Be Sorry Later
I have had many clients who could have recovered more money if they had only had adequate UM insurance. For some of them, it could have been a lot more money. Hopefully, you are not in that boat right now. If you are, all you can do is buy UM now to cover you in the event of another accident.