What is Uninsured / Underinsured Motorist Coverage?
Uninsured motorist (UM) insurance is a type of insurance that protects you if you are in an accident that is someone else’s fault and that person does not have car insurance. It is insurance coverage that is a part of your overall car insurance policy.
For example, person A, who does not have insurance, runs a red light causing an accident with person B. At the time of the accident person B has UM coverage. Since Person A was responsible for the accident and Person A doesn’t have insurance then Persons B’s UM insurance coverage will go into effect and pay for the damages, both bodily injury and property damage that Person B suffered.
Underinsured (UIM) insurance, on the other hand, is a little more complicated. This type of insurance protects against situations in which the at-fault driver is insured for less than the amount it takes to compensate you for your damages (medical treatment, pain and suffering, lost income) after the full amount of their insurance (policy limits) is paid out.
For example, Person A, has a policy limit of $25,000 which is the most amount of money their insurance can pay out if they are ever in a wreck that is their fault. Person A causes a wreck with Person B whose medical bills exceed $30,000. After Peron A’s insurance paid the policy limits of $25,000 then Person B’s UIM would go into effect and pay the remaining damages that Person A’s insurance could not cover.
UM Insurance, Added-On vs. Reduced-By
When you elect to purchase UM insurance as party of your coverage you have the option of selecting “Added-On” or “Reduced-By.” While “Reduced-By” coverage is less expensive it is a risk and as they say you get what you pay for.
For example, person A has $25,000 in coverage and while driving is texting on their phone and causes an accident with Person B. Person B has $25,000 in UM coverage but it is “Reduced-By.” Person B is injured and has $50,000 in medical bills. Person A’s insurance pays Person B $25,000 (policy limits). Now Person’s B UM coverage goes into effect. However, because the UM insurance is “Reduced-By” Person B will not get any additional money. “Reduced-By” UM insurance allows the amount of Person B’s UM coverage ($25k) to be reduced-by the amount of insurance the at-fault driver’s insurance ($25k) paid Person B. It would work out like this:$25,000 (Person B UM insurance) – $25,000 (Person A insurance) $0 (amount of Person B’s UM insurance left to pay)In this situation, even though Person B purchased $25,000 in UM insurance coverage it would not help them to cover the additional medical bills because their UM insurance was “Reduced-By.
Uninsured (UM) insurance and Underinsured (UIM) insurance works differently as shown in the examples above but it is purchased as the same insurance. When you purchase auto insurance and elect to pay for UM coverage then you automatically have UIM coverage.
Why do I need Uninsured Motorist Coverage and Is It Worth It?
You may be asking yourself, why do I need UM/UIM coverage if it’s against the law to drive without insurance? In a perfect world you don’t need it. Unfortunately, there are drivers that don’t have insurance coverage. According to the 2015 study conducted by the Insurance Research Council (IRC), 13% of all drivers are uninsured meaning that one in eight drivers in the US drive without insurance. In Georgia, the IRC estimated that 12% of all active drivers did not have insurance. This means that its more common than most people might think. Based on the number of uninsured drivers on the road it’s important to be insured and have the protection necessary if you are in a car accident in Gwinnett County.
Additionally, even if the driver that causes a car accident has insurance they may not have enough to compensate you for your medical bills and other damages. Georgia law requires that all drivers must have at least $25,000 bodily injury liability coverage for one person in one accident and $50,000 bodily injury liability coverage for all persons in one accident. If you are in an accident and the driver who hit you has the state minimum coverage ($25,000) and you have $50,000 in medical bills but do not have UIM coverage, then you can only get $25,000.
Can’t I Just Sue a Driver Without Insurance?
Of course, it is very possible to sue the at-fault driver directly if they don’t have insurance. However, most drivers that drive without insurance probably don’t have much money or assets to compensate for bodily injuries they cause to someone else—your pain and suffering and lost wages. In other words, suing them might not be worth the time or money. Having a UM/UIM policy already in place removes this risk all together. In the legal word there’s a term known as judgment proof meaning that they are a type of person that has no money or property within the jurisdiction of the court to satisfy the judgment or they are protected by wage laws that exempt their salaries or properties from formal judicial process. In other words, it’s someone that does not have enough money to pay the full amount that they are being sued for and thus is essentially exempt from paying for any damages brought against them.
For example, Person A (who does not have insurance) hits Person B. Person B finds out that Person A does not have insurance. Person B decides to sue Person A after the car accident for $1.2 Million and wins. However, Person A only has $100 in their bank account and $2,000 in assets. Person A is judgment proof because they do not have enough money to pay the amount that the court is demanding they pay to Person B.
This is another reason UM coverage is very important because it protects against being injured by one of those people that do not possess enough money or assets to satisfy your claim. It not only protects against those that do not have insurance but also ensures that you get just compensation for an accident that was not your fault.
Will My Premiums Go Up if I File an Underinsured Motorist Claim?
Absolutely not! Georgia law prohibits insurance companies from increasing rates and premiums (O.C.G.A. § 33-9-40) or from canceling existing policies (O.C.G.A. § 33-24-45) for customers that were not at fault for an accident.
Road to Recovery
Once you become involved in a collision that is not your fault, your interest and the insurance companies’ interest are dramatically opposed. The insurance company works to pay as little as it possibly can get away with, and you want to be adequately compensated. This makes things incredibly stressful. To add to this stress, you will also be wondering how you are going to pay your bills while your hurting and out of work. All of this pressure can make you feel like you are lost and is incredibly stressful. Don’t confront this situation alone, instead contact our Atlanta accident attorneys at Bross, McAllister & Williams, LLC. With a free consultation available in Gwinnett County, they will ease your mind and guide you down the Road to Recovery.