Underinsured Motorist Coverage: As the examples in my previous post demonstrate, in light of the high cost of healthcare today in Chicago, it is very easy for the value of personal injury cases to exceed the state minimum liability limits of $20,000. So what happens if you suffer personal injuries and the at-fault party did not purchase sufficient insurance?
In this scenario, insurance companies offer what’s called “underinsured motorist coverage” (“UIM”). UIM insurance is coverage that you can purchase to fill the void left when someone who did not purchase sufficient insurance ends up injuring you. It happens more often than you realize. Just look around next time you’re driving and see how many cars you see that are 10+ years old. To illustrate this scenario, imagine someone rear ends you, and your medical bills total $60,000, but the at-fault driver only bought a state minimum “keep you legal for less” insurance policy with only $20,000 in liability coverage. The at fault driver’s insurance company is only obligated to pay the first $20,000 to settle your case, leaving you responsible for the next $40,000 in medical bills. However, had you purchased $100,000 in underinsured motorist coverage when purchasing your own automobile insurance, you could then make a claim against your own insurance company for the $80,000 difference between your underinsured motorist limits and the $20,000 offered by the at fault insurance company. Purchasing underinsured motorist coverage is the only way to protect yourself from the harsh economic realities of the world we all live in. Also, compared to liability insurance, underinsured motorist coverage is relatively cheap.
Uninsured Motorist Coverage: What if the person that hit you had no insurance at all? This is an unfortunate fact of life as well. Often times, when someone has been involved in multiple poor driving events, insurance companies will refuse to insure that person any longer. Also, people lose their jobs and see their auto insurance premium as something they can cut back on. Or people simply lose their bills and forget to pay on time. Also, what if the person that hit you just immediately flees the scene, leaving you no opportunity to even ask if they are insured? In these instances, insurance companies offer what’s called “uninsured motorist coverage” (“UM”). UM insurance is coverage that you can purchase to fill the void left when someone injures you but either leaves the scene (“hit and run”) or stays, but does not have valid insurance. If you are injured and you had previously purchased uninsured motorist coverage, you then can make a claim with your own insurance company, who will pay out on your claim up to the limits of the uninsured motorist coverage you buy. Similar to underinsured motorist coverage, uninsured motorist coverage is often relatively cheap.
As one of the first people to speak with someone following life’s tragic events, it is my extreme displeasure to often have to inform people that while they’ve suffered greatly, sometimes in a life-altering manner, the person who inflicted this suffering on them won’t be able to help make them whole again. I then investigate whether or not they protected themselves from this scenario with un- or underinsured motorist coverage. Every once in a while, people in this situation don’t, and it’s the worst part of my job to tell them that their only option is bankruptcy. Do yourself a favor and make sure that you are not just purchasing automobile insurance sufficient to protect the people you might hurt from financial disaster, but also looking out for yourself.
Spencer Law Blog 