This week’s question comes from Carey C. in the Sunset, who asks:
Q: “I have a scooter that I use to commute to work downtown, but I am thinking about getting a car so I can get out of The City sometimes. I know I have to have liability insurance. A friend said I should also have uninsured-underinsured motorist coverage on my insurance policy. Is it really necessary, if I already have health insurance?”
A: Carey, I talk with clients about uninsured-underinsured motorist coverage all the time. Attorneys and people in the insurance industry often refer to it as “UM-UIM” insurance. Unfortunately, by the time clients come to me, they have already been injured, and it’s too late for the UM-UIM discussion.
The best time to think about insurance is before you need it.
Liability insurance protects your assets if you are at fault for an accident and hurt someone or damage someone else’s property. It also provides you with a lawyer if you are sued for causing an accident. It does not, however, protect you from damages you suffer in an accident that is someone else’s fault.
UM-UIM insurance is one of the most important and most overlooked forms of insurance. State law only requires drivers to have a minimum of $15,000 in liability coverage for any one person in an accident; $30,000 minimum coverage or all injuries in an accident; and $5,000 minimum property-damage coverage. Statistics show up to 25 percent of the drivers on the roadway are uninsured. A significantly larger number are underinsured. Even if an at-fault driver hits you and carries the state minimum of $15,000, in many cases that won’t even cover the cost of an emergency visit.
UM-UIM coverage protects you in the event you are injured in an accident that was the fault of an uninsured or underinsured motorist. In the case of no insurance, you can recover up to the amount of your uninsured motorist coverage. If you have a greater underinsured motorist coverage then the liability coverage of someone who hits you and is found to be at fault, you can recover the balance between the amount of their insurance and your insurance.
One particularly nice and underrecognized feature of UM-UIM coverage is that it protects you and your family in just about any accident involving a motor vehicle. You do not even have to be in a vehicle to be protected. For example, if you are hit by a negligent, uninsured motorist while you are walking or bicycling, your UM-UIM policy will step in and cover a variety of damages, including lost medical expenses, lost wages, lost earning capacity, educational losses, pain, suffering, anxiety and emotional distress.
California law requires insurance companies to offer you UM-UIM coverage that equals your liability limits, at least up to $ 250,000. Many companies go a step further and sell UM-UIM coverage that equals whatever liability limit you choose, so you can even have $ 1,000,000 in UM-UIM coverage if you have $ 1,000,000 in liability coverage. For whatever reason, however, some companies do not seem to like to sell UM-UIM coverage.
Insurance agents will sometimes suggest that you waive or severely limit your UM-UIM coverage to lower your premium. Do not do it. Pound for pound, UM-UIM coverage is often one of the least expensive coverages on your policy.
Insurance companies and I are often adversaries, but I will be the first to tell you that protecting yourself through insurance is extremely important. Research the issues, shop around and talk with friends and family. I suggest you consider adding UM-UIM coverage to all of your vehicle policies, including your new car and your scooter/motorcycle policy.
Hopefully, you will never be in an accident, but you cannot just rely on luck or even your own good driving skills. Insure yourself against other people’s mistakes to the best of your ability. It’s money well spent.
Christopher B. Dolan is owner of the Dolan Law Firm. Email questions to firstname.lastname@example.org.