Coppola & Melonakis Blog

Top 5 Reasons You Should Have Uninsured/Underinsured Motorist Coverage

In my earlier blog post, I explained exactly what uninsured/underinsured motorist coverage is, how to find out if you have it, and how it works. Now, I want to give you my Top 5 Reasons why you should get uninsured/underinsure motorist coverage if you don’t have it. And, if you do have it, why you should consider increasing your UM/UIM policy limit.

Reason No. 1: You Automatically Qualify For UM/UIM Coverage

As stated in my first blog post, the law in Colorado requires that any insurance company selling automobile insurance to a Colorado resident must offer this type of coverage at the time a new policy is sold. You don’t have to do anything to qualify for this type of insurance, and your driving record will not affect your ability to obtain this type of insurance. As stated before, this type of insurance is optional. You can choose to waive this type of coverage by declining it in writing.  However, if you declined UM/UIM coverage when you first bought your policy, you can always add it later. Just call up your insurance company and tell a representative that you now want to add UM/UIM coverage to your policy.

Reason No. 2: You Get to Pick How Much Protection You Want

UM/UIM automobile insurance is one of the best types of insurance you can buy to protect yourself from the negligent acts of others. Why? Because  when  you buy UM/UIM  insurance, it’s like buying a liability insurance policy for every single driver on the road, and YOU get to pick their insurance policy limit.  Think of it this way: If you buy uninsured/motorist coverage with a policy limit of $100,000 per person/$300,000 per accident, it’s like buying that much liability insurance for every other driver on the road!

According to the most recent data, 15% of drivers in Colorado do not carry any automobile insurance on their cars. Yes, it is against the law, but many people do it anyway. That means there are approximately 600,000 drivers out on our roads every day who have absolutely no liability insurance to provide coverage for injuries they may cause to others. As a practical matter, if you are injured by one of those drivers, chances are very unlikely that you will ever recover any money from them for your injuries. In my experience, people who fail to carry liability insurance on their automobiles tend not to have much in the way of personal assets, either.  UM/UIM coverage also protects you in the event you are the victim of a hit-and-run accident. The other driver, often referred to as the “phantom vehicle,” will be treated as an uninsured motorist such that you can make a claim for uninsured motorist benefits under your own policy.

For those drivers who do carry liability insurance on their cars, many people choose to buy the lowest amount of liability insurance required by law, which in Colorado is currently $25,000 per person/$50,000 per accident. Although $25,000 may sound like a lot of money, if you are seriously injured in a car crash, it’s a drop in the bucket, especially if you are required to spend a few day in an ICU.  And, if your injuries prevent you from returning to work, it won’t even scratch the surface of your total damages and losses.

People sometimes ask me, “How much uninsured/underinsured motorist coverage should I buy?” I always tell them, “As much as you can afford.” Obviously, how much coverage you are able to buy will depend upon your personal finances. UM/UIM insurance is like most insurance. We hate paying for it, we hope we never need it, but when we do need it, we often wish we had bought more. Many financial experts recommend carrying at least $100,000/$300,000 of liability insurance coverage and $100,000/$300,000 of UM/UIM coverage.

Remember, if you want to increase your UM/UIM coverage, you will also need to increase your liability coverage limit. As you may know, the amount of the policy premium charged by an insurance company is determined by statistical data and mathematical calculations done by the company’s underwriting department.  By analyzing statistical data, the insurance company tries to predict how likely it is that the policy holder will someday make a claim against the policy. The lower the probability of a claim, the lower the premium, and the higher the probability of a claim, the higher the premium. Fortunately for you and me, most car crashes do not cause serious bodily injuries  or death. Accordingly, as a general rule, the higher the policy limit, the lower the probability that the policy holder will someday make a claim for that policy limit.  You might be surprised at how little it increases your insurance premium to raise your policy coverage limits to the next higher level. And trust me on this, if you or a loved one is ever seriously injured by the negligent acts of another driver, you are going to be very thankful that you bought uninsured/underinsured coverage with a higher limit.

Reason No. 3: It Provides Coverage to You Even When You’re Not Driving Your Car

Another nice feature of uninsured/underinsured motorist coverage is that it “follows the insured.” Automobile liability insurance just insures the car. In contrast, UM/UIM insurance insures you and the other members of your household, even if the injuries caused by a negligent driver occur when you are not in your vehicle. So, if you are a passenger in a friend’s car that is involved in a crash caused by a negligent driver, you can make a claim for UM/UIM benefits under your own policy. If your friend also has UM/UIM coverage on his car, you can make a claim against your friend’s policy and your own policy (assuming you have the injuries, damages and losses that require that amount of money to fully compensate you). What if your friend caused the accident? You can make a claim against your friend’s policy for liability insurance and claim against your own policy for underinsured motorist benefits.

Uninsured/underinsured motorist benefits also provide coverage to you when you are a pedestrian or riding a bicycle. So, for example, if a negligent driver runs a red light and strikes you as you are walking through a crosswalk, you would be entitled to make a claim against you own policy for UM/UIM benefits even though you weren’t even driving your car at the time of the accident.

Reason No. 4: You Can Combine UM/UIM Coverage From Multiple Policies

Under existing Colorado law, you are permitted to “stack” uninsured/underinsured motorist benefits from multiple polices you own.  Let’s say you own three cars and you buy an insurance policy on each that includes UM/UIM benefits of $100,000 per person/$300,000 per accident. If you are seriously injured in an accident caused by a negligent driver, you may be able to combine, called “stacking,” the UM/UIM coverage available under each of your policies. So, instead of just having $100,000 of coverage available to compensate you for your injuries, you would have $300,000 of combined coverage under the three policies.

If you own and insure multiple cars, you need to check with your insurance company to determine what type of coverage you have. More and more companies are writing one policy for multiple cars. Those policies usually provide that there is only one UM/UIM policy limit that applies to all of the insured cars. In other words, the policy language prevents stacking of multiple UM/UIM coverage limits.

Reason No. 5: It Provides Financial Protection for You and Your Loved Ones

Perhaps the best thing about purchasing uninsured/underinsured motorist coverage is that it gives you peace of mind. If you have this type of coverage, you know  that if you, your spouse, your children who live with you and your passengers will have a certain level of financial protection in the event one of you is insured by the negligent acts of another driver. It’s similar to term life insurance. You hope a claim will never need to be made against the policy.  However, there is comfort in knowing that if the need ever arises, you have taken the necessary steps to provide financial protection for you and your loved ones.

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