Uninsured-Underinsured Motorist Coverage
What is UM or UIM?
Uninsured or underinsured motorist coverage can pay for injuries to you and your passengers when there is an accident and the other driver is both legally responsible for the accident and considered “uninsured” or “underinsured.” In addition, uninsured and underinsured motorist coverage can pay for injuries to you or any resident relative living in your household, even if your automobile was not involved in the accident.
An uninsured driver is someone who did not have any liability insurance, had insurance that did not meet state-mandated minimum liability requirements, or was not financially able to pay it. A hit-and-run driver also counts as uninsured as it relates to bodily injury as long as there was an impact with the uninsured vehicle (UMBI). However if you are claiming uninsured motorist property damage, the hit and run driver must be identified before you can recover for uninsured motorist property damage.
An underinsured driver is someone who had insurance but the amount of the insurance was not high enough to pay for the personal injuries or damage caused by the accident. In these situations, UIM can pay you the differences in your underinsured coverage and the at fault automobile liability coverage if your case warrants that amount of damages.
Is It Required?
North Carolina General Statute 20-279.21(b)(3) and (b)(4) requires all licensed drivers to carry Uninsured/Underinsured (UM/UIM) motorist coverage on their insurance policies in an amount at least equal to the highest bodily injury liability coverage on said policy. Unfortunately though if you carry only the minimal liability coverage, you will not likely have Underinsured coverage.
Why Would You Want It?
Simply put, you want to be protected. If you get into an accident with someone who is driving without insurance or doesn’t have enough of it, you will most likely not get just compensation. With UM/UIM in place, you will have a means to collect damages for your injuries and other expenses incurred.
UM/UIM coverage is usually affordable, especially considering the amount of protection it offers. It could pay your medical bills, lost wages, and pain and suffering. If someone hits you or your car and is legally responsible for the damages, you won’t get any money from them if they don’t have money to give you. Especially during times when people are struggling economically, many drivers either do not have insurance or do not have enough insurance. If you have UM/UIM, you can get money even if the other driver doesn’t have enough.
How Does UM Coverage Work?
Let’s say for example you were in an automobile accident that was someone else’s fault. You received a broken arm and your case was worth $50,000. The person that hit you let his insurance expire so there is no liability coverage from which to collect. The person that hit you has no extra money or other assets to pay you. At this point, you can turn to your UM coverage on your own automobile policy. At this point your insurance carrier has a duty to step in and pay for your damages. In this example, let’s say you carried the minimum in North Carolina which is $30,000. Remember, your case is worth $50,000. In this scenario, your insurance company would pay you $30,000 under the UM portion of your policy.
Take it a step further. Let’s say you carried $100,000 in UM coverage. Your case is worth $50,000. In this scenario, your insurance company would pay you only up to the amount of the value of the case… $50,000.
How Does UIM Coverage Work?
Remember, underinsured motorist coverage protects you if you are injured as a result of someone else’s negligence, and they do not carry ENOUGH coverage to compensate you properly.
In this example, let’s say you were injured in an automobile accident and your case was worth $50,000. The at fault driver carries only the minimum policy limits in North Carolina of $30,000 but you carry $50,000 in UIM covearge. In this scenario, the at fault insurance company will pay you its full $30,000 in coverage. That leaves $20,000 owing on the value of your case. Your insurance company will now step in and pay you. But first, they get to take a credit of $30,000 already paid to you. They will then pay the additional $20,000 available on the policy.
Consider this. Let’s say that your case was worth $100,000 but you still only had $50,000 in UIM coverage available. The at fault insurance company would pay you $30,000. Your own insurance company would next take a credit of $30,000 from the $50,000 policy. This leaves you with only $20,000 of UIM coverage available but your case is worth $100,000 and you’ve only been paid $30,000 so far. What happens to the extra $70,000 that your case is worth? Well, you will only get $20,000 because you can only get up to the amount of your policy, even if your case is worth more.
Which now brings us to an important point…
How much UM/UIM coverage should you carry?
In North Carolina, UM/UIM coverage will generally come in the following amounts:
30/60 $30,000 per person/ $60,000 per accident (This applies to UM only)
50/100 $50,000 per person/$100,000 per accident
100/300 $100,000 per person/$300,000 per accident
$1 million $1,000,000 per person or accident
As you can see in the above scenario, the coverage of $50,000 was not enough to protect you. We routinely advise clients to carry AT LEAST $100,000.00/$300,000.00 worth of coverage. Better yet, carry $1,000,000 worth of UM and UIM coverage. That way, if you are ever in an accident and have catastrophic injuries, you are more protected with this amount of coverage. Checking with a local insurance agency, we found that 100/300 in UM/UIM coverage usually costs around $34.00 per vehicle per year. $1 million costs approximately $185.00 per vehicle per year.
Many times, when you are purchasing insurance from your agent, they will tell you that you have “full coverage”. People sometimes will mistake this to mean that they have high limits on their policy. Full coverage only means that you have the minimum required by North Carolina to be fully covered ($30,000). That is simply not enough. Take action and insist on getting higher limits for your coverage.