If you are involved in a serious motor vehicle
accident which is not your fault, and there is inadequate liability insurance
coverage for the at-fault driver, the adverse economic impact on you can be
significant.
Most of us think defensively about whether or
not we have adequate liability insurance coverage. We can protect ourselves
from liability exposure by being careful and prudent drivers, and by carrying
higher levels of liability insurance. But the larger risk for
responsible drivers may be that a negligent driver with inadequate insurance
harms us and leaves us exposed financially.
There is little we can do to protect ourselves from
drivers negligently causing us harm, other than to drive defensively,
especially when approaching busy intersections, passing side streets with stop
signs that are sometimes viewed as being optional at busy times of the day,
and being on the lookout for those using
cell phones or texting while driving. However, we can limit significantly the adverse economic impact on us caused by
these negligent drivers.
Consider this situation: you are in a wreck
which is not your fault. In addition to medical bills, which your health
insurance carrier may pay, you are out of work for several days and even
weeks. The negligent party has no insurance, or the minimum coverage of
$30,000 per person per accident.
Your economic loss for being out of work, not
even considering your other compensable damages (pain and suffering and
permanent injuries among them), is going to be significantly greater than
$30,000. The negligent party’s other assets are rarely adequate to compensate
you fully for your loss.
This risk of economic loss is particularly dangerous
for higher income wage earners. If a family has higher living expenses, including
a large mortgage, the family may be thrown into temporary economic turmoil.
Relatively recent changes in state insurance
laws give vehicle owners more options regarding uninsurance/underinsurance
coverage. But be fully aware of the consequences of giving up relatively
inexpensive additional coverage.
The minimum limits for liability insurance a vehicle
owner must carry is $30,000 per person, and $60,000 per accident. Many of
us carry higher limits, but statistics show that many more of us carry the
absolute minimum limits.
A vehicle owner who purchases higher liability limits
has the right to reject the extra coverage for the same uninsurance/underinsurance
limits. Owners often make uninformed decisions, not fully recognizing the
risks of their decision. While the cost
of this extra coverage is a few dollars, the financial risk by failing to have
this coverage is significant.
For example, let’s say you have liability
insurance coverage and underinsurance coverage of $100,000 per person per accident.
If you have a loss of $75,000, and the negligent party has the minimum coverage
of $30,000, your own underinsurance carrier will “stand in the shoes” of the
negligent party for the other $45,000 of the claim ($75,000 claim, less the
$30,000 coverage paid by the negligent party’s insurance carrier). With
underinsurance coverage of $100,000, therefore, you are fully compensated for your
loss.
If you had rejected the extra
uninsurance/underinsurance coverage, you and your family are exposed. Your
loss, over the $30,000 of coverage paid by the negligent party’s carrier, is
$45,000.
Under the law, if you purchase higher liability
limits over the minimum coverage, you may choose uninsurance/underinsurance
coverage in the same amounts of your liability coverage, or for a greater or
lesser amount of coverage. Choose the
higher UM/UIM coverage if you can afford it.
It is worth the extra cost.
You
should contact your carrier now and inquire about your
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