The Difference Between Uninsured Motorist Coverage and Underinsured Motorist Coverage
Let’s start with the distinction between uninsured and underinsured motorist coverage. Uninsured motorist, or UM, coverage is insurance that covers you and your passengers in the event the driver who causes an accident does not have insurance. In practical terms, your uninsured motorist carrier steps into the shoes of the uninsured at-fault driver, and covers damages he caused.
A concern I often hear from clients when discussing their pursuit of an uninsured motorist claim is, “I don’t want to make a claim against my insurance company. They will raise my premiums!” This is a common misconception, and is absolutely false. Insurance rates do not go up when you are involved in an accident if you are not at fault. In order for there to be a successful UM claim under your policy, there had to be an accident, the accident was not your fault, and the at-fault driver had no insurance. Payment made by your UM Carrier is an admission that you, the insured, was NOT at fault, and there will be no increase in premium due to the accident. A sigh of relief almost always follows this explanation.
Underinsured Motorist Coverage is the coverage that “kicks in” when the at-fault driver’s insurance policy limit is insufficient to compensate the insured for his/her injuries. The key here is that the UM coverage under the injured party’s insurance policy must exceed the liability limits under the at-fault drivers insurance policy in order to receive any benefit. It is confusing so here is an example of how this works:
Bob is insured with State Farm and has UM limits of $100,000.00. He is rear ended in a terrible accident by Joe who is insured with AAA. Joe’s insurance policy liability limits are only $15,000, but Bob’s medical bills alone are $20,000. Bob also has thousands of dollars in lost earnings. In this case it is likely that AAA will offer to pay Bob the full amount of Joe’s policy limits, $15,000, to settle the case on Joe’s behalf. If Bob accepts that offer he can then make a claim for Underinsured Motorist Benefits with State Farm for up to $85,000 ($100,000 minus the $15,000 received from State Farm).
This is a good example of why it is so important to have sufficient UM Coverage. I tell my clients to purchase as much UM Coverage as they can afford. Many people carry minimum insurance coverage and if you are hit by one of them, your UM coverage is what will help cover your damages and make you whole. I am amazed by how many insurance policies I see where there is either no UM Coverage or coverage that is substantially less than the liability coverage. I explain to clients that by carrying more liability coverage than UM coverage, they are protecting others more, sometimes significantly more, than they are protecting themselves and their loved ones. Once they realize that UM coverage is the part of their policy that covers themselves and their family, they quickly respond, “I’m going to call my agent as soon as I leave your office and increase my coverage”.
The other important thing to know about UM Coverage is that it protects you and your family in any “Motor Vehicle Accident.” This includes situations where you may be a passenger in someone else’s car and there is not enough insurance to cover your injuries. It will also insure you and your family members if any of you are hit by a vehicle as a pedestrian, bicyclist, or a bystander. It acts like a safety net for you and your family in ways you probably never imagined. If your injury was the result of a motor vehicle accident, your UM Coverage will be available if needed.
California Law requires your Insurance Company to offer you UM Coverage with limits equal to the limits of liability for bodily injury in the underlying policy. See California Insurance Code §11580.2 (a). It is not mandatory that you purchase it, but if you don’t, the Insurance Company is required to have you sign a declaration declining such coverage. If they fail to do that, and you are involved in an accident with an uninsured driver, your Insurance Company will be required to provide you with up to $30,000 per person and $60,000 per accident, depending on the liability coverage set forth in your policy. See Enter. Ins. Co. vs Mulleague (1987) 196 Cal App. 3d 528, 241 Cal. Rptr. 846.
It is my hope that after reading this you will review your insurance policy immediately and increase the UM Coverage by as much as you can afford. You will be surprised at how little the cost of the increase will be and it will supply you with the peace of mind you and your family deserve.
Contact an Experienced Auto Accident Attorney
My law practice exclusively represents personal injury victims and does so with a deep understanding of their suffering and an absolute commitment to their recovery. I take your injuries personally, and that is why I directly handle all aspects of every case to ensure that you receive maximum compensation.