The importance of “UM” and “UIM” insurance
*The purpose of this article is for sharing information only and is not meant establish any attorney-client relationship and is not to be construed as legal advice. If you have any specific questions, please contact us through the phone number or email address provided.*
The importance of “UM” and “UIM” insurance
UM = Uninsured Motorist
UIM = Underinsured Motorist
Do you know whether you have UM/UIM coverage? Do you know what the policy limits are? We are often surprised at how many people do not know his or her own insurance policy limits and whether the policy includes UM/UIM coverage as well.
According to the Insurance Research Council, it is estimated that about 15% of drivers in California do not carry automobile liability insurance. The actual number of uninsured drivers is probably much higher than the estimate since the estimate is only based on uninsured motorist claims made to insurance. What does this mean for you?
Number of licensed drivers in California = Over 25.5 million.
Number of potentially uninsured drivers in California = Over 3.8 million.
If you are involved in a motor vehicle collision with one of the MILLIONS of uninsured drivers, your ability to be compensated for your injuries and damages are severely limited. If that driver had no auto insurance, your only recourse may be to go after the at-fault driver personally. But it’s likely that a driver who has no insurance has no assets. That means there’s no one to cover your medical bills, lost wages, and pain and suffering.
If your insurance includes UM coverage, then you at least have some source of compensation available to you.
Even when the other party does have insurance, it may not be enough to cover your losses. In California, the minimum level automobile insurance required, as set forth by California Insurance Code §11580.1, is the following:
$15,000 for injury/death to one person;
$30,000 for injury/death to more than one person; and
$5,000 for damage to property.
These are very low limits considering how expensive medical treatments and vehicle repairs can be these days. If you miss any time from work or have significant injuries that require extensive treatments or even surgery, the state minimum insurance limit will not be sufficient to cover your losses.
Underinsured motorist coverage can provide you with coverage for your injuries/damages that exceeds these minimum amounts.
However, your UIM policy limit must be higher than the at-fault party’s insurance limits to even apply. For example, if the at-fault driver has a state minimum $15,000/$30,000 policy and your UM/UIM policy limit is also $15,000/$30,000, you cannot recover from your own UM/UIM policy. In California, UM/UIM policies do not “stack” on top of the at-fault party’s insurance. In fact, your UM/UIM will claim a credit of the at-fault party’s liability insurance policy limit paid out against your UM/UIM policy limit. Additionally, you must fully exhaust the at-fault driver’s liability insurance policy.
For example, you have $100,000.00 in UIM coverage and the at-fault party has $15,000 in liability insurance. In this scenario, you will be able to recover from your UIM, assuming you have received the full $15,000, the policy limit, from the at-fault party’s insurance. Your carrier will claim a deduction of the $15,000 received from the at-fault driver’s insurance against your own UIM policy limit. This means you can recover up to $85,000 from your UIM in this scenario.
In the same scenario above, if you recover less than the at-fault driver’s full $15,000 policy, your own insurance carrier will deny the UIM claim as the at-fault driver’s insurance policy limit was sufficient to cover your losses.
What Will Uninsured/Underinsured Motorist Coverage Actually Cover?
Uninsured/underinsured motorist coverage essentially steps into the shoes of the at fault party’s insurance carrier and covers both the economic damages and non-economic damages relating to your bodily injury.
Economic Damages include the following:
- Medical bills.
- Cost to repair your damaged vehicle.
- Rental bill or loss of use of your vehicle.
- Lost wages and/or loss of employment.
- Other property damage.
Non-economic damages include the following:
- Pain and suffering.
- Mental and emotional distress.
- Physical impairment and disfigurement.
- Loss of enjoyment of life and daily activities.
In California, UM and UIM coverages are provided together, meaning you can’t have one and not the other. However, it is possible to waive both UM/UIM coverage and not have any added protection for yourself and your passengers. And to buy additional UM/UIM coverage is only incrementally more expensive than carrying just the minimum. It only takes one claim to make it all worthwhile.
Please check your insurance policy to make sure that you have plenty of insurance coverage, for both liability and UM/UIM. And if you have any further questions, please do not hesitate to contact us at the phone number or email address provided.
Law Offices of Alex Cha & Associates
707 Wilshire Blvd 46th Floor
Los Angeles, CA 90017