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UM/UIM Automobile Coverage

Early January can be a bit depressing, and to get myself feeling better, I think of something fun like uninsured/underinsured (UM/UIM) coverage on my automobile policy. To be honest, I do not think I took any notice of my insurance coverages before I became a lawyer. I remember an agent saying to me that “most people get $100k per person/$300k per accident for liability insurance” in case they injure someone else. I am not even sure I knew that uninsured/underinsured coverage was a thing. Times have changed. 

Getting in an auto accident is bad enough without the at-fault driver having no insurance or inadequate insurance to cover your damages. It is critical that you check how much UM/UIM coverage you have on your auto insurance policy. This coverage protects you and your family when you are involved in an automobile accident with an at-fault driver who either has no insurance or is underinsured. It is estimated that 6% of drivers in Massachusetts have no auto insurance. That number goes up to 13% for the entire United States, and in some states the number is as high as 20%. Furthermore, thousands more Massachusetts drivers are on the roads with only the state minimum in bodily injury liability coverage, which is a meager $20,000 per person/$40,000 per accident. Even Texas has higher mandatory liability insurance limits!

Massachusetts requires that every driver has uninsured motorist coverage in the amount of $20,000 per person/$40,000 per accident. Underinsurance coverage is optional in Massachusetts. However, it is recommended that you buy as much UM/UIM coverage as you can afford. This coverage is relatively cheap, and you can usually buy up to 250k/500k in UM/UIM coverage if you carry the same limits on your liability insurance. 

Uninsured coverage (UM) protects you when the at-fault driver is driving with no insurance coverage, and as a result there is no policy from which to recover your damages. This could be because the driver never bothered getting any insurance, let their insurance lapse, or left the scene of the accident and was never identified. It will not surprise you to hear that people who drive around with no insurance usually do not have any other assets you can go after. However, if you have medical bills, lost wages, and other damages from an accident with at fault-driver who is not insured, you can look to your own UM coverage to compensate you. 

Example: You have 100k/300k UM coverage. You are at a red light when an uninsured driver rear-ends your auto, and you incur $50,000 in medical bills. You can recover 100% of your damages from your own UM policy – $50,000. 

Underinsured coverage (UIM) protects you when the at-fault driver has auto insurance, but their liability limits are insufficient to cover your damages. In that case your own UIM policy steps in to cover the excess damages. 

Example: You have 100k/300k in UIM coverage. The at-fault driver blows a stop sign and causes you $100,000 in medical bills, lost wages, and other damages. That driver only has the state minimum 20k/40k coverage, which means the most you can recover from him is $20,000, leaving you on the hook for $80,000. In this scenario you can look to your own UIM policy to cover the $80,000 in damages ($100k minus the $20k received from the at-fault driver). 

Finally, UM/UIM coverage does not just protect you when you are driving your own vehicle. It usually covers the named insured: 1) when occupying your own auto; 2) when occupying an auto you do not own; or 3) if you are injured as a pedestrian. It also offers insurance protections, with certain exceptions, to household members and anyone else occupying your auto. 

You should review your UM/UIM auto insurance coverage and seek to maximize it to the fullest extent possible. You simply cannot rely on other drivers to carry enough insurance to cover your losses in the event of a serious accident.