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B. Uninsured and Underinsured Motorist Coverages
These coverages protect you and your passengers from the financial loss
incurred due to an accident caused by a driver who has no insurance or
insufficient
amounts of insurance. Contrary to popular belief, these coverages do not
cover the other driver. You are protecting yourself! Another major misunderstanding
about
these coverages is they do not cover your vehicle for physical damage.
Check with
your insurance company to see if the collision coverage on your policy
would cover
you in such an event, or if additional material damage coverage is needed
to cover
your vehicle. If your collision coverage covers your vehicle, you may
want to
purchase a collision deductible waiver (if available), to ease your concerns
about
paying your deductible in such an occurrence.
Policies vary from state to state but in most cases uninsured and underinsured
motorist coverages cover you in any motor vehicle you are in, as well
as being a
pedestrian or riding a bicycle. These coverages act as the other person's
bodily
injury liability since they didn't carry adequate coverage. In other words,
your
insurance company is now liable to cover your medical expenses, time off
from
work, pain and suffering, death, disability or other miscellaneous related
expenses.
State requirements may vary from a minimum of $15,000 per person, $30,000
per accident, to no requirement for these coverages at all. The limits
of uninsured
and underinsured motorist coverages selected guarantee you the minimum
amount
of protection you will have in the event of another driver's error or
negligence.
At this point, I would like to briefly address "no fault" coverage.
Some states
are "no fault states" which means, by law, your coverage is
different than I have
outlined above. In these states, you select the amount of bodily injury
protection you
desire and purchase that coverage from your insurance carrier. Each state's
laws
vary, making it almost impossible to cover this topic in detail. However,
I will say this,
you have to use the same considerations in selecting "no fault"
coverage as you do
in selecting your uninsured and underinsured motorist coverages as I have
outlined.
One of the most frequent and expensive mistakes people make is duplicating
coverages. What I mean by this is they carry coverages on their auto policy
that
they are already covered for on other policies. The only area of coverage
not
duplicated by another policy, and can only be covered by the auto policy,
is coverage
for pain and suffering.
Examples of duplicated coverages that may exist under uninsured and underinsured
motorist coverages are as follows:
You may be carrying major medical coverage for you and your family with
a
$500 deductible and a co-pay of 20% up to a limit of $1,500 out of pocket
per
person, with a maximum out of pocket of $4,500 per family. You may also
be
carrying life insurance on yourself and your spouse and possibly disability
insurance
through your employer. In addition, social security has survivor benefits
for dependent
children under the age of 18 if the parent dies and is covered by social
security.
There are also disability benefits for the worker covered under social
security.
The next step is to check with your major medical, life and disability
insurance
companies to see what coverages you already have so you can determine
what
limits of uninsured and underinsured motorist coverages you need. You
don't want
to purchase duplicate coverages from your auto insurance carrier; that's
throwing
money away since most policies will not make duplicate payments. Duplicate
payments will be discussed in more detail a little later.
Unlike liability coverage where your risk in theory is unlimited, here
we can
evaluate our needs based on the coverages you already have. Here are several
questions you should ask yourself. How much risk do I have before my medical
coverage pays 100%? Is my life insurance adequate? If not, in most cases
it is
better to upgrade the life insurance since you are not limited to coverage
only in the
event of an auto accident. What about disability coverage? This is often
the most
neglected of all non-auto coverages.
My personal opinion on uninsured and underinsured motorist coverages is
as follows: You need to evaluate the cost of uninsured and underinsured
motorist
coverages at minimum limits and higher limits and then decide if the extra
cost is
worth it. Look at the cost of $15,000 per person, $30,000 per accident,
versus the
next several levels, say $25,000 per person, $50,000 per accident, $50,000
per
person, $100,000 per accident or $100,000 per person, $300,000 per accident.
You may notice that going from the minimum limits to the next level is
fairly reasonable
in price while going to the higher limits could become a bit pricey.
If the state in which you live has no requirement for uninsured or underinsured
motorist coverages, it's your decision whether you carry the coverages
at all. I
hope I have given you the tools necessary to make an educated evaluation
and
decision for yourself.
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