When it comes to the way that insurance is regulated on the auto side of the coin the regulations are left to each state to determine on their own. What each state must do is the same as the government is supposed to do in any situation, protect the citizens from potential harm. With auto insurance, the goal is to protect individuals from financial harm and this is very apparent when you consider the coverage labeled as uninsured motorist coverage.
The goal of uninsured motorist coverage is for someone to be able to insure themselves in the event that they are struck by someone that is considered an uninsured motorist. To be able to understand how this coverage works you must first understand a little bit about liability coverage and how it is mandatory in almost every state in the country. This is where we will start.
State Minimum Liability Insurance Coverage
Almost every state in the country requires that you carry a minimum amount of liability insurance coverage on your vehicle in order to be driving legally. Liability coverage (often referred to as BIPD coverage) is coverage that you purchase in order to pay for the damages to other vehicles or people that you caused. In other words, this coverage will not pay for the damages to your vehicle or for your injuries that resulted from an accident.
Many people are confused by this coverage because it is a coverage that does not protect them or provide them with any help in the event of an accident. However, the coverage that is provided is extremely beneficial if you understand what it does.
When you drive a vehicle on the road you are expected to be reasonable and prudent in your decisions and the failure to do this is considered negligence. This negligence is legally enforceable as a part of “tort law”. Tort law is when one person violates the rights of another. This is not to say that causing an accident is a criminal act, but instead it is a negligent act committed against the other driver.
In effect, the purchase of liability insurance protects you from being sued for the damages that you caused to someone else’s vehicle or person. The lack of liability coverage opens you up to a lawsuit where your own personal assets would be in play. When you are struck by an uninsured motorist your uninsured motorist coverage will step in and act as the uninsured party’s liability coverage.
Uninsured Motorist Bodily Injury Coverage (UMBI)
There are two different types of uninsured motorist coverage that you can attempt to purchase and the first one has to do with coverage for injuries to individuals. In reference to the discussion on liability coverage the first part of BIPD coverage is Bodily Injury. The first two numbers on your BIPD coverage apply to injuries that are caused and how they are paid.
The first number is the amount you could pay total for the injuries to one person and the second number is for the total you could pay for everyone injured in one instance. For example, 100/300 is $100,000 for injuries to one person and $300,000 for injuries to all the people total.
Your UMBI coverage acts the same way if you are injured by someone that does not carry liability coverage. The coverage will be listed the same way and will be applied the same way as well.
Uninsured Motorist Property Damage Coverage (UMPD)
The second uninsured motorist coverage type is UMPD and it is the coverage that applies to the damages to your vehicle after you are struck by an uninsured motorist. This matches the PD part of your BIPD coverage and is assessed in the same manner. In other words, if you have 100/300/100 BIPD coverage you have up to $100,000 to pay for damages to a vehicle that you caused.
If you have UMPD coverage with the same limit then you have the same options as far as coverage limits. The opportunity to get UMPD coverage is a little tricky as the coverage is not offered in all states as it is with UMBI coverage. In fact, only half of the states in the union offer Uninsured Motorist Property Damage coverage. Your insurance company can only sell it to you if the state says so.
In some states there is no limit to UMPD coverage, there is just a different deductible and coverage for a rental vehicle. If you don’t know what your UMPD coverage offers you need to contact your insurance agent to find out.
When Does UMBI/UMPD Apply?
In order to use your uninsured motorist property damage coverage there must be a few things in line for you. Some are simpler than others but these are the basic things that have to be in line for you to get access to your UMBI/UMPD coverage.
1.) You must have the coverage on your policy.
You get what you pay for when it comes to auto insurance coverage and if you didn’t pay for UMBI/UMPD you don’t get it. Doesn’t matter how sad your story is or how mistreated you are, you don’t get coverage you didn’t pay for. If you have UMBI/UMPD coverage available to you then you need to buy it and don’t question it.
2.) You must be legally entitled to recover from the uninsured party.
Remember that your uninsured motorist coverage is meant to act as if it were the liability coverage of the uninsured person. Their liability coverage would only pay for your damages or injuries if they were responsible for the accident, just as your uninsured motorist coverage will do.
3.) The other party must be uninsured.
This may seem obvious, but many people assume that if the other person’s insurance denies your claim based on who is at fault that uninsured motorist coverage is accessible. The insurance company isn’t denying that coverage exists, just that it is accessible to you. The other person has to be uninsured, as in no coverage at all, for you to access your uninsured motorist coverage.
What if the Other Party Doesn’t Have Enough Liability Coverage?
When the other party has no insurance coverage they are uninsured, when they have inadequate limits they are underinsured. Underinsured motorist coverage is separate from uninsured motorist coverage because it applies in different situations. Here is an example of the difference.
You get in an auto accident where the other party is responsible and you file a claim with their insurance company. The insurance company says that the driver of that vehicle failed to make their premium payment on time and is therefore uninsured. Your uninsured motorist coverage will step in and you will have coverage that you would have had through that person.
You are in the same auto accident and file a claim and the insurance company tells you that the person had valid coverage. However, your damages are about $8,000 and the other person only carries $5,000 in property damage liability coverage. They tell you that they will send you a check for $5,000 but the rest is up to you and the person to figure out. Your underinsured motorist coverage will kick in for the damages that are above $5,000.
Does the Uninsured Motorist Get Away without Repercussions?
The short answer to this question is “no”, but the long answer is much more difficult to answer. What happens when a person is insured and your insurance company pays for your damage is that your insurance company will subrogate against (or send a bill to) the other insurance company. The other insurance company will either pay if they are at fault or not pay and dispute the liability in front of an arbitrator.
If the person is not insured and you use your uninsured motorist coverage your insurance company will attempt to do the same thing with the uninsured party. In other words, if that person is identified your insurance company will send them a bill and tell them that they are legally required to pay for your damages. The person has a choice, to pay or risk going to court and being legally pursued damages.
The benefit of going through the insurance company is that many insurance companies will allow the person to pay on a payment plan. This allows the uninsured motorist to make things right without going broke in the process. Either way, you are paid for your damages and your vehicle is fixed, the insurance company is responsible for the rest.
Putting it All Together
When it comes down to it uninsured motorist coverage is a coverage that many people decline without realizing what they are declining. This is an insurance coverage to provide coverage in the event that someone else does not have insurance coverage. This seems silly and confusing at times, but it is actually very important for you to carry.
Especially in times like we are in now where so many people are struggling to make ends meet, insurance is one of the first things to go. Uninsured motorist numbers are on the rise and the only way to protect yourself is to carry the right kind of insurance coverage for the situation. Get the coverage that your policy allows you in the state in which you reside.
Liability coverage and auto insurance coverage in general is made more expensive because of people that choose to travel without insurance coverage. The more people that carry this coverage the better off those people will be and the more they will save in the event of being struck by an uninsured motorist.
Getting Multiple Insurance Quotes
Make sure that you get multiple insurance quotes on uninsured motorist coverage and talk to insurance agents about what is possible in your state. Some states require that each separate vehicle carry the coverage while others require that only one vehicle needs it on a policy for all vehicles on the policy to have access to it. If you aren’t well versed in the ways of the insurance world you won’t know the difference between the two.
You could also choose to just use your collision coverage if you are struck by an uninsured motorist, but your deductible will likely be higher in this case. In addition, insurance companies usually raise your rates if you use collision coverage by more than they do if you use your uninsured motorist coverage. This is another reason why having an agent to explain all of this can make all the difference in the world.