Is Uninsured Motorist Coverage Worth Purchasing?

Mar 5, 2021 | Personal Insurance

Many drivers ask: “Is uninsured motorist coverage worth purchasing?” It’s something that seems to be at that back of their minds: Should this coverage be added to their existing auto insurance? You may have thought about this too! You might be hesitating because you aren’t familiar with this type of insurance. Your budget may also affect your decision.

Spending your money on something that you don’t fully understand will really make you hesitant. You might doubt if this will cater to your needs. To find that out, we will take you on a trip explaining what uninsured motorist coverage is.

We are going to let you know the answer. With all the unknowns on the road, this coverage is definitely worth your money. But first, we will keep you informed about its definition and how it works. You will also know about the reasons why you need it. Keep reading to find out!

What is uninsured motorist coverage (UM)?

Uninsured motorist coverage is a part of a basic policy. This coverage pays you if the one that hit you doesn’t have auto insurance. Is it possible to drive without coverage?! Yes, but not without consequences. You have to remember that almost every state requires its drivers to have a minimum amount of auto liability insurance. It is illegal to drive without it. Make sure you get insured before driving around.

Here’s a possible real-life situation. You are staying in your lane since you have been trying to drive safely at all times. Unfortunately, you can’t control the whole road. After passing by seven cars, the next car, the eighth one, hit you. What makes it worse is that the driver doesn’t have auto insurance.

Statistics say that one out of eight drivers on the road is uninsured. This is why some states require that insurance policies include uninsured motorist coverage aside from auto liability. It means that though you consider yourself a safe driver, chances say that the one you get into an accident with might be uninsured. This is where coverage from uninsured motorists kicks into action.

How does it work?

If your vehicle gets hit by another driver, meaning they are at-fault, then their insurance should be the one who reimburses you. But what will you do if the one who caused this doesn’t have an auto policy? Your uninsured motorist coverage will pay if this situation happens. 

Another situation is when you are a victim of a hit-and-run accident. Like everyone does, people will panic if they caused something bad. That isn’t an excuse to run from what you did though. This coverage will pay for the costs of the medical bills for health concerns and the damages brought by hit-and-runs. In some states, the perpetrator should be identified first before it will reimburse you.

Why does my insurance have to pay if I am not the one who caused it? If it doesn’t pay, then you might find it troublesome to come up with the money for repairs and medical expenses. Your insurance does its job to protect you from going broke. Add to the fact that the one who hit you may desert his responsibility.

What are the types of uninsured motorist insurance?

Car insurance doesn’t only insure the car, it also protects the driver. We aren’t that techy yet to have self-driving cars like the ones that James Bond uses. It might cost a lot too. Since cars won’t drive by themselves, insurers consider the drivers.

Uninsured motorist insurance coverages are classified into two. There is one for medical expenses, and one for property damage. Find out more about these two below:

  • Uninsured motorist bodily injury coverage (UMBI). The name implies that it protects the driver financially. If you get injured when your car is hit by an uninsured driver, then it will pay. It may reimburse you for lost earnings, suffering, and pain.
  • Uninsured motorist property damage (UMPD). This is the type that covers the car itself. It pays for the repair costs of the car and other properties damaged due to the accident.

If I have health insurance, then why would I need UM coverage? 

You might have many reasons for you to not purchase insurance against uninsured motorists. One such reason is your health insurance. However, there are several reasons that will tell you that getting covered by this insurance is worthwhile.

It pays for medical costs made by a car accident

Your health insurance will pay for injuries after an accident. However, in general, some health insurance providers wait for your other coverages to kick in first. If they’re spent and you still need coverage, then it would pay for the remaining costs. In addition, since the other driver is at fault, your insurance for health expects the other party’s liability coverage to reimburse you. 

The problem is, the at-fault driver has no insurance coverage that will reimburse you. UMBI will cover injuries no matter what. As long as you can prove that it’s true, it will reimburse you.

It protects your passengers

Being insured in terms of health isn’t mandatory anymore, though many people still get it. In case your passengers don’t have health insurance, then this coverage will protect them from car accident injuries. It falls under UMBI. It is better to be safe than sorry!

You may recover your lost income

As said above, UMBI may pay for your lost income and suffering. This, in most cases, isn’t covered by your health insurance. You wouldn’t want to work while you have your wounds, right? That would hurt a lot.

This insurance will pay as long as you provide proof that you will lose your wages because you are injured — suffering and pain included. It would be a bargain for you. Not only have you received protection for your wounds, but you are also assured that your income isn’t wasted.

Do I still need uninsured motorist coverage if I have collision insurance?

We’ve said that UM coverage includes one for medical costs and one for property damage. If it is a state requirement, then you may have no choice but to get covered. However, if it isn’t, then you may have an option to drop both or drop one only. The question is which one?

Many drivers wonder if they still need uninsured motorist insurance when they have collision coverage already. Collision coverage pays for the repairs of the car in case of a collision. It will pay no matter who is at fault. Since it will pay for the car repairs, you may consider dropping uninsured motorist property damage (UMPD) coverage.

However, you should take note that you have to pay deductibles in both coverages. Deductibles are a set amount of money that you will pay out-of-pocket for your insurance to kick in. Uninsured motorist coverage requires lower deductibles than collision. In addition, it is also less pricey than collision insurance. The downside though is that it won’t pay if you are at fault for the damage.

You may want to keep UMBI though. As mentioned above, it will pay for lost income and suffering. It would be a big help since you may not want to lose money while you are resting for recovery.

Is uninsured motorist insurance different from underinsured motorist coverage?

What makes uninsured and underinsured motorist insurance different? Usually, these two come together when the agents introduce to you the types of coverage that you may buy. However, there is a certain difference between them. 

Underinsured motorist coverage pays if the other party doesn’t have enough auto liability insurance. We have talked earlier that there is only a minimum amount of it. Many drivers choose to not purchase more because of their budget. However, there is no telling if the scale of an auto accident would be large or not. That is when the importance of buying more coverage shows.

We are not telling you to buy a lot more than you need. The point is that you should give an extra as a backup. This is the point that most drivers neglect. For example, the driver’s auto insurance only amounts to the minimum requirement of the state. The damages you received was much more than that. Your underinsured motorist coverage will pay for the remaining amount that the other driver’s coverage couldn’t pay.

How much coverage should I get?

In general, it is recommended to match the coverage limits to your liability insurance. As a matter of fact, many states require their drivers to get identical amounts of their insurance for liability and UMBI. 

For example, the minimum coverage for liability in Denver, CO is 25,000 dollars per person for bodily injuries. It is 50,000 dollars if we are talking about the policy limits per accident. On the other hand, the minimum for property damage is 15,000 dollars per accident. Take note that you can purchase higher limits.

The most ideal uninsured motorist coverage that you should get is at least the same as that amount. That is the case, especially for UMBI. You can set your uninsured motorist property damage (UMPD) for a lower limit though. Consider your car’s value as a reference for the limit that you may get.

How do I file an uninsured motorist claim?

Now that you know how uninsured motorist coverage works, let’s talk about filing an insurance claim. Does it only involve calling your insurer saying that someone hit your car, and they don’t have insurance? It is more than that. There are some things that you will have to prepare.

Here’s what happens when filing one:

  1. Someone with no auto insurance hit your car (or in some cases, hit you and ran).
  2. After finding out that they don’t have insurance, you called your insurer to cover you for the damages.
  3. The insurance company will dig into the matter, verifying if the information you gave is true.
  4. You will receive your reimbursement according to your policy contract if the case is proven valid.

Things to prepare 

The chances of receiving a payout depending on its validity. Since your insurer would be the one to reimburse you instead of the other driver’s provider, you will have to provide proof. Below are some things that you may prepare.

A written account of the accident

Telling the details of the accident is something that you need to do. Writing a statement will let them know about the situation on that day. Of course, they may still request an audience with you and ask you for a more detailed statement.

Photos 

We all know that cameras can capture images. They can’t only be used to take pictures of scenery and selfies, they also come in handy during accidents. If you can move, then it is recommended to take photos of the scene. Try capturing pictures from different angles for a more comprehensive view. Aside from that, take photos of your injuries too. They would be a big help.

Medical bills and reports

Since UM coverage also includes bodily injury into account, medical bills and reports are concrete evidence. They will give information about the injuries you have sustained, as well as the cost. 

Receipts

Getting into auto accidents don’t only make you pay for medical bills and car repairs. There may be other kinds of related expenses too. It is advisable to keep these intact and present them as another piece of evidence.

Proof of lost income

UMBI also reimburses you for the lost earnings that you should’ve earned had it not been for the accident. You should provide evidence for any lost income. This way, they will know the amount of the “supposed” wages and if it is true.

Want a higher payout? Know about stacking.

Did you know? There is a possibility for you to receive a higher payout from your insurance policy! However, this method may not be allowed in your state. You are lucky if you live in Denver, CO because this is allowed in there. Still, this is a great way to receive a bigger reimbursement from your insurance company. What is this method?

Stacking

Stacking allows a policyholder to combine the coverage limits of their policy to increase the payout. The rules for stacking may vary depending on the state’s auto insurance laws. However, if it is allowed in yours, then grab the chance!

Here’s an example. You insured two cars in one policy. For each car, the limits are 30,000 dollars each. Stacking the two will give you 60,000 dollars per accident. In case someone hits you while they’re uninsured, you may receive that amount as reimbursement. However, take note that your insurer will not pay you more than your policy limits.

Will my rates increase if I make a UM claim?

Most states allow insurance companies to raise the rates of the customers who get into uninsured motorist accidents. Though the rules may vary company by company and state by state, you can’t remove the possibility of an increase in your rates.

What makes it worse is when you stacked your coverage limits. You will have to pay higher premiums after stacking. Here’s a tip: if you don’t need to stack, then don’t. You might have received a higher payout, but you might lose more when you pay your rates. Of course, remember that it’s all up to you.

What happens if I reject uninsured motorist insurance?

There are many variables that you may have neglected when you reject this coverage. They may be the family or friends that you have as your passengers. You may have overlooked the trouble that you may face when asking for compensation. Let us answer the question: “What happens if I reject uninsured motorist insurance?”

You have the option to sue the uninsured driver who hit you. However, it will only bring you a burden. It is time-consuming, and it may waste your money and effort. Hiring a lawyer needs money, which you could have used for your recovery.

With this type of insurance coverage in your policy, it will save you the trouble of suing someone and wasting time. It is apparent that letting your insurance company compensate you is a better move. Not only will you have assurance, but you would also be able to receive compensation for your suffering and lost income.

Have your questions about uninsured motorist coverage been answered? It is now obvious that it is worth purchasing. You might have the so-called full coverage insurance, which usually consists of liability, collision, and comprehensive coverage. But you may want to consider this one. 

Final Say

If your health insurance pays for your medical bills, then UMBI pays for it too, including your lost income. In terms of property damage, UMPD has a lower deductible than collision. You might ask if you still need them if you are fully covered.

Though you may feel that you don’t need them, you can’t tell the importance of something at the first glance. You would find it really worthwhile in times where you experienced an accident. As they say, insurance is an investment, and, at the same time, it is protection.

In case you want to ask for a more detailed explanation, call us today. At Advantage Insurance Solutions, our excellent team will handle your queries and concerns with the best of our efforts. Get a quote from us, and we will give you the one that best suits your needs!