‘Uninsured motorist’ coverage: why we need it

I recently sat down with a prospective client who had been injured in a car crash. One of the things I routinely do is to look at the person’s own automobile insurance policy just as a courtesy. I noticed this elderly man had more than a million dollars in liability coverage to protect his personal assets if he hurt someone else. But he had only $30,000 of “uninsured coverage” (UM) to protect him if he was hurt by someone else who had very little or even no insurance. We had a long talk about this difference and why he needed to increase his UM limits.
Here’s what I told him: Buy as much uninsured automobile insurance coverage as you can get. It’s cheap. It can be a life-savor. Don’t ever assume that your agent has given you enough uninsured motorist coverage (UM coverage) simply because your company or agent told you that you have “full coverage.” Go grab your declaration page or your last auto insurance bill and take a look. You may be surprised like my client was.
UM coverage works in two ways. First, it acts as primary insurance if the other driver has no insurance whatsoever. So, for example, if a person with no insurance blows through a stop light and rams you and you end up needing back surgery, the UM coverage from your own policy will pay you directly. This could mean hundreds of thousands of dollars of compensation available to you instead of getting nothing or very little money if your UM limits are very low. We all know that there are, unfortunately, many people driving our roads and highways without insurance, even though the law says they are supposed to have it. Second, it provides additional coverage if the other driver only has a small liability policy; it kicks in after that amount has been used up. So, it can be tapped into to supplement a lesser amount from the other drivers small insurance limits.
Years ago, I had a tragic case come to my offices. Three young people were driving home from a party when a drunk driver with no insurance crossed into their lane and hit them head-on. Their injuries were horrible. Broken bones. Collapsed lungs. Large lacerations and scarring. They all survived but had to spend months in the hospital. As you can imagine, the medical bills went through the roof. They had health insurance but they were still saddled with huge bills. They couldn’t work. They couldn’t pay their bills and rent.
Because the drunk driver had no insurance, the UM coverage became the only source of money available to them. It kicks in when the driver who causes the collision has no insurance, or only a little bit of insurance. They each had UM coverage of the minimum amount of $15,000 each, which, as you can imagine, was used up quickly. We sued the drunk driver and got a million dollar award, but he went to prison and has no money; we haven’t collected a penny from him and probably never will. If only these kids had a million dollars of UM coverage instead of $15,000, their lives would have made easier and their medical care would have been taken care of.
I generally fight against insurance companies every day in my job. That doesn’t mean that I don’t believe having the right type of insurance isn’t important. It is. Extremely. It can mean a lot if you are unfortunate, as my three young clients that fateful evening. Go check your insurance policy and make sure you have at least $500,000 of UM coverage at a minimum. Hopefully, you’ll never need it. But you never know.