Do Individuals Need UM Coverage?

Uninsured or underinsured motorist coverage (referred to as UM or UIM, respectively), is a special form of auto insurance in that it gives drivers an added opportunity to safeguard themselves from “out there”—specifically, all those people driving along with little or even no auto liability insurance.

Even though nearly all states have mandatory minimum limits of liability required of all drivers, many of these limits are less than adequate in providing coverage on injuries sustained in an auto accident. Which brings us to the premise of this article, the need for UM coverage. A few states also need a minimum number of UM be purchased; however, many leave this decision up to the driver.

In addition to its special nature, UM coverage is often misunderstood. A typical question to ask is why someone would pay for UM if they are covered under another form of medical or disability insurance? The answer involves understanding what UM will pay for that other policy contracts specifically exclude or do not cover.

UM policy contracts agree to pay for compensatory damages. This term is not specifically defined in a UM policy contract because its goal is to cover a broad arrangement of financial losses you personally incur at the fault of an underinsured driver. Even though it’s true that a few expenses like bodily injury costs may also be covered by your medical insurance, others may not be. These expenses can include disability income, injuries to other passengers, and non-economic losses like pain and suffering.

Further, escalating healthcare insurance costs are leaving additional folks without medical insurance. In 2007, the amount of Americans without medical insurance went above 46 million. Many of these folks drive cars and are one auto accident from an underinsured driver away from financial ruin. For someone with no health insurance, UM is an essential, reasonably priced coverage.

So how much UM insurance should you consider purchasing? Since expenses like those mentioned above that are covered by your UM can be pricey, it is always recommended that you carry the highest limits available. Lower limits might lead to insufficient dollars available to pay a claim, or worse. A few states' laws actually don't allow you to recover UM coverage if the limits are equal to the state’s minimum auto liability limit unless the driver who hits you has no insurance at all. Even though there are certainly those out there, nearly all drivers have at least minimum limit to satisfy their state requirements. Because state laws concerning UM coverage can vary, it is critical to contact your agent when considering changes to your auto insurance program.

In a perfect world, there would be no place for UM coverage; however there are still a lot of people out there who have not discovered the importance of buying sufficient auto insurance liability limits. You never know who is going to cause your next accident. UM can assist you and let you rest assured that even if they aren’t covered, you will be.