By: George T. Major, Jr., Esq., Oliver Maner LLP
Entering a vehicle is one of the most hazardous activities that most of us will encounter on a day-to-day basis. Every time you get into a vehicle to drive to work, drive to the store, or return home, you are putting yourself at risk for injury. A good UM/UIM policy is your way of insuring yourself "against the world" in the event you find yourself injured as a result of a collision caused by either an uninsured or underinsured driver.
What is UM/UIM coverage? Insurance brokers and attorneys commonly throw this term around, but it simply means insurance coverage that insures you (and certain others) in the event that you are injured as a result of a collision caused by either an uninsured or underinsured motorist. That is, UM/UIM coverage is coverage that you purchase to pay you insurance benefits if an at-fault driver's insurance coverage is insufficient to compensate you for your damages. If you are in a wreck with an underinsured driver (meaning that your damages exceed the amount of that driver's liability insurance policy), you have effectively bought the at-fault driver an adequate amount of insurance. UM/UIM coverage is unlike the liability coverage that you are required by law to carry on your vehicle - liability coverage that you have would pay another driver if you were at fault for a wreck that caused them injury; UM/UIM I coverage that would pay you if you were injured by an at-fault driver with insufficient insurance coverage.
Who is covered by your UM/UIM policy? You should always read your specific insurance policy carefully to determine what or who is or is not covered by that policy. In general terms, a UM/UIM policy will cover anyone that is occupying an insured vehicle and is injured in a collision caused by another driver with an insurance policy that is insufficient to pay for the damages caused by the wreck. A UM/UIM policy also provides coverage for resident relatives of the named insured on the policy - even if that person is not in the insured vehicle when they are injured. For instance, if a family member who lives with you is riding in a friend's vehicle and is involved in a collision with an uninsured driver, they can potentially recover through your UM/UIM policy. If the friend's vehicle had a UM/UIM policy, they can potentially recover through that policy, too. Despite these generalities, you should always review your specific policy to determine what is or is not covered by that policy.
What types of UM/UIM policies are there? There are two common UM/UIM policies: (1) UM/UIM Added On, and (2) UM/UIM Set-off. An added-on policy means that the limits of your UM/UIM policy can be "added on" to the limits of liability coverage available. For example, if you have a $50,000 limit UM/UIM added on policy, and an at fault driver has a liability policy of $25,000, and you have $100,000 in damages from a wreck, you could recover $75,000 in insurance proceeds ($25,000 liability + $50,000 UM/UIM). A UM/UIM Set-off policy means that the amount of UM/UIM money you can recover is "set-off" by the amount of liability coverage. Using the example from before, you could only recover $50,000 in insurance proceeds because your $50,000 UM/UIM policy would be "set-off" by the $25,000 liability policy ($50,000 UM/UIM policy - $25,000 available liability = $25,000 of recoverable UM/UIM; $25,000 recoverable UM/UIM + 25,000 available liability = $50,000).
UM/UIM coverage is relatively inexpensive. An added-on policy usually costs slightly more than a set-off policy, but will potentially provide you with the full extent of your UM/UIM policy in the event you are injured in a wreck with an underinsured driver. When I see clients who have been injured in a wreck caused by a driver with low insurance limits, it is too late for them to obtain the UM/UIM policy that could have provided them with a larger pool of insurance proceeds to compensate them for their injuries. Despite this, I always give my clients this advice - get as much UM/UIM coverage as you are able to obtain and can afford for the future. Hopefully, this advice will keep them from finding themselves in a situation of having $200,000 in medical bills from a wreck and less than $50,000 of insurance money available to them. UM/UIM insurance is an investment for the protection of you and your loved ones.