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Q & A with insurance experts on uninsured, underinsured motorist coverage

Insurance agents weigh in on how much UM/UIM coverage you need and how much it costs

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Yesterday, I wrote about the startling study by WalletHub, which estimated that 21% of the drivers in Michigan are driving on our roads without auto insurance.

Today, I’ve reached out to three friends of this Auto Lawyers Blog to get an insurance agent perspective on this issue:

We asked all three for their professional advice as to the importance of  uninsured/underinsurance motorist coverage (UM/UIM) its affordability and the levels they would recommend.

Below are the experts’ answers.

Why is it so important for Michigan drivers to have both UM and UIM coverage?

  • Verlinde: “If the statistics showing 21% of drivers are uninsured are not enough reason to purchase the UM/UIM coverage, [then consider] that the study does not include all the people driving with state minimum liability limits of $20K/$40K. If you are involved in an accident where you are not at-fault and [you are] severely injured to a point where a jury will award a judgment against the at-fault driver, and that at-fault driver is either uninsured or carrying minimum limits, I can almost guarantee [the at-fault driver] will not have the means to pay the judgment [him- or herself]. That’s where your UM/UIM coverage kicks in. It pays you for the judgment that the at-fault driver is unable to pay.”
  • Hale: “The importance of UM/UIM is … to pay tort damages …”
  • Blackwell: “‘[I]f an at-fault driver is uninsured or does not have enough insurance, the injured person is not likely to recover anything in a lawsuit. That is why many insurance companies now offer Uninsured Motorist (UM) or Underinsured Motorist (UIM) coverage by rider to the basic no-fault policy. With this coverage, the policyholder may look to his or her own insurance company for coverage of additional losses.’” (Quoting the Michigan Department of Insurance and Financial Services (DIFS) web site)

How affordable is UM/UIM coverage?

  • Verlinde: “It is amazing how affordable the coverage is. Typically, we see the cost to be around $20-$25 per car per six months. For less than the cost of a cup of coffee a day … If people are dealing with an agent or a company that ‘forgets’ to add the coverage or quotes the bare minimum, [the agent or company] are only trying to make sure they are the lowest price [in order to get the consumer’s business] and [they are] not looking out for their clients’ best interests. If the $25 per six months is a deal breaker, I would recommend that you forgo Road Service coverage. Without Road Service, you may be risking a $50 towing bill being un-covered. Without UM/UIM coverage, the results could be life changing.”
  • Hale: “Pricing depends on the limits and other underwriting considerations like driving records. But a limit of $500,000 may cost as low as $300-$400 per year, a small price to pay when you [consider] some of the catastrophic [crashes that occur].”
  • Blackwell: “It is very inexpensive – maybe $15-25 a year per vehicle for $500,000 limits in most cases. Some insurance companies allow you to extend your UM/ UIM limits into your personal umbrella coverage, but we rarely see this elected as the cost to do so is large relative to the typically small umbrella premiums. Conversely, some insurance companies do not offer both UM and UIM or strictly offer lower limits to their customers, leaving their customers more vulnerable.”

How much UM/UIM coverage should people get?

  • Verlinde: “You can only purchase an amount up to the amount of Bodily Injury liability you carry on your policy. We always quote and recommend carrying equal limits for both.”
  • Hale: “The limits should be purchased at $500,000 or more and insureds should even get a quote for excess limits in an umbrella which some carriers will go up to $2 million more.”
  • Blackwell: “People should consider purchasing the same UM/UIM limits as liability limits with the idea that you should protect yourself as well as you are protecting others (liability limits).  Normally, we think of liability limits as protecting our assets, but our liability limits also protects the other party in a loss by providing assets that they can collect against. So I will often suggest to my clients that they may wish to protect themselves with UM/UIM limits as well as they are protecting others with their liability limits.”
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Blog Author Steven M. Gursten
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