Understanding the ins and outs of uninsured and underinsured motorist insurance coverage (UM/UIM) can save you a lot of financial grief if you are injured in an accident. This type of insurance is available from your own insurance company and covers you when the driver responsible for your injuries is uninsured or does not have enough coverage to compensate you for the damages that you have sustained. According to the Insurance Research Council’s latest statistics, 26% of Alabama divers are uninsured.
Your insurance carrier is required by Alabama law to offer a minimum of $20,000 in UM/UIM. As an example, if a jury awarded you $50,000 in damages against an uninsured driver and you have the minimum UM limits of $20,000, that would be the limit of your recovery. If the driver at fault had $20,000 in liability coverage, you would recover both policy limits and could pursue the remaining $10,000 of your judgment against the at fault driver, but your chance of recovery would not be good. This situation does not describe every case, my recent chats with attorneys in The Woodlands, Texas have made this quite evident to me. If I has one piece of advice it would be to carefully pay attention to every step, case per case, as they say.
This will be a four part series. To wind this first part up, here are some tips:
1) Buy all that you can afford. Your agent may not push it, but you will be amazed at what little price difference there is between the minimum and $100,000 worth of coverage.
2) You can legally disclaim UM/UIM coverage by signing a written disclaimer – NEVER DO THIS. The savings is clearly not worth it.
3) Finally, do not hesitate to file a claim with your own carrier. IT WON’T RAISE YOUR OWN RATES. Insurance companies do not treat a claim where you are not at fault as a negative one.
The fact that your insurance policy’s declaration page says that you have a specific amount of uninsured/underinsured (UM/UIM) coverage may not be the final word. If you have more than one car on the same insurance policy and you are involved in a collision where the at fault driver is uninsured or underinsured, you can “stack” the UM/UIM policies limits of up to two more insured vehicles on top of the vehicle involved in the collision. If you own three cars and have $100,000 in UM/UIM limits, your total available UM/UIM coverage available would be $300,000. If you own four cars, the total would still be $300,000.
Using the figures shown above, let’s assume that a car owner is driving to the store when another driver runs the red light and hits him. That driver has liability insurance with a $100,000 limit. At trial, the jury awards the driver $575,000. How much can the driver recover, and from whom? The at fault driver’s liability coverage pays it’s $100,000 limit and the victim’s UM/UIM carrier pays its limits of $300,000. The victim’s recovery is capped at $400,000 – the total amount of liability and UM/UIM coverage involved.
Uninsured/underinsured (UM/UIM) insurance covers “bodily injury” damages, but not property damage. In short, it provides coverage for all of the same personal injury damages that you would able to recover against an at fault driver. Those damages include medical bills, physical pain and suffering, emotional pain and suffering, permanent injuries, disfigurement, loss of the ability to earn a living and lost wages, past and future. Your spouse may also maintain a claim for loss of consortium (also known as loss of services) subject to the same individual coverage available to you.
Punitive damages may be recoverable if the uninsured driver is drunk, driving way over the speed limit or engaging in other aggravated conduct. Check your policy, however. By law in Alabama, your insurance company may exclude punitive damages from UM/UIM coverage. The only instance where that exclusion would not apply would be on a wrongful death claim. In Alabama, the only damages available for a wrongful death are punitive damages and so the exclusion would not apply.
When your medical bills related to the collision have been paid by your health insurance provider, a worker’s compensation carrier, Medicaid or Medicare, they will want to be paid back. Sometimes the law says they can recover and sometimes it says that they cannot. Sometimes, they are only entitled to partial reimbursement. These can get quite complicated and should only be trusted to a lawyer who is well versed in this area of the law.
In addition to making sure you do not reject that coverage and that you buy all that you can afford, the following thoughts may be helpful:
a. Do your homework. The internet is a great place to start. Does the company you are looking at exclude punitive damages as a remedy for personal injuries. If that is the case, how much will you save in premiums? Who is a covered driver under this policy? If your son who is off at college covered when he drives your car at Christmas break? What do other consumers say about this company?
b. What happens if you have to file a claim? Is the agent local? When a claim arises, this can be very helpful. If possible, talk to other folks about their experience with that particular agent or agency. The best person to talk to, of course, would be an insured who submitted a substantial claim. Was it handled promptly? Did your agent help them through the process, or were they on their own? When they purchased their coverage, did their agent tell them to by all they could afford, and why?
Last – and this bears repeating, do not be hesitate to file a claim if you need to. You have paid for this coverage and filing a claim will not raise your rates. I hope that you never need any of this advice (other than how to purchase the coverage and how much to purchase). Drive safe and good luck.