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Uninsured/Underinsured Auto Coverage?
Old 09-27-2014, 11:36 AM   #1
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Uninsured/Underinsured Auto Coverage?

I have been reading quite a bit of a blog (can't recall the name) that was mentioned here in the forums. He's a patent attorney that lives in Georgia and hands out advice for all sorts of things. One thing he mentions that carrying uninsured/underinsured coverage is a real waste of money. He basically said that this is nothing more than giving you the "right" to sue your own insurance company.

So...my hypothetical is that I don't need this coverage. It is a sizable expense and I assume that since I carry comp/collision, the UIM is really of little value. If someone hits me and runs off, then I am able to file a claim under the comp coverage (although minus the deductible). Also, in Georgia it's estimated that about 11% of driver (as of 2012) don't have ANY insurance, so the odds of being hit by an uninsured motorist is remote.

Another argument for HAVING UIM coverage is for medical payments. However, it appears that most of the medical coverage is usually in the neighborhood of 25K, which is pretty low. Also, I have excellent health coverage, so even if I had to absorb these costs, the maximum out of pocket would be relatively low.

What is the opinion of some of you smarty folks out there?
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Old 09-27-2014, 11:53 AM   #2
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Originally Posted by FlyBoy5 View Post
Also, in Georgia it's estimated that about 11% of driver (as of 2012) don't have ANY insurance, so the odds of being hit by an uninsured motorist is remote.
Well, the odds of a $50k or greater incident happening to your house is 'remote' as well. As is being sued for amounts greater than $1MM. But, I assume you have some sort of homeowner's and umbrella coverage, as well?

You also have to look at the scope of the lawyer's audience. Will most readers of the blog have > $1MM in assets to protect?

Also, there are numerous circumstances whereby the under/uninsured coverage could come into play:

1) Chain reaction - You are sitting 3 cars behind the stoplight. A car (uninsured) plows into the back of you, pushing you into the car in front of you, which also hits the first car at the stoplight. The driver causing the accident has no insurance, and no assets. Whom do you think the 1st and 2nd cars will sue/make an insurance claim against? No one? Add in some "neck and back injuries" into the accident, and suddenly you're at $50k in claims, easy. Or, in the event of a "gray area", where you might be partially to blame, for a large incident, your under/uninsured coverage should help cover the costs caused by the uninsured driver's portion of responsibility.

2) Injuries to passenger - You are hit by an under/uninsured motorist. I believe the coverage will protect you in the event your passenger (whom is injured) sues someone.

3) Injuries to yourself - Similar to 2), I believe this will at least give you some recourse if you are injured or your car/property is damaged by an under/uninsured driver.
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Old 09-27-2014, 12:02 PM   #3
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In college I was in a motorcycle accident when an idiot driver backed out of her driveway without looking for traffic on the street. I was the traffic. (When I say she didn't look - she didn't stop at all - a pedestrian on the sidewalk would have been run over... she just put it in reverse and backed out screeching. ) I blew my knee out and totalled the motorcycle I commuted to college with. Of course, she had no insurance.

I collected for my bike from my collision coverage. My medical and pain/suffering was covered under U/I. I was grateful I had that coverage.

I sued her in small claims court, and won... but she moved and ditched me before she paid a penny. I had her DL pulled in CA for not paying out a judgement on a auto collision award - but she probably just left the state.

U/I coverage is required here in CA. Not optional.
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Old 09-27-2014, 12:16 PM   #4
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U/I coverage is required here in CA. Not optional.
Actually it's not required in CA. Basic 15/30/5 liability is required (less for low income drivers, something like 10/20/3), but not UM. That doesn't negate the solid arguments for why it should be carried, but it is still optional in CA.

(Creds: CA auto insurance underwriter in a prior life)
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Old 09-27-2014, 02:04 PM   #5
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I worked in the actuarial field for 23 years, specializing in personal auto insurance. Let me provide some background although I no longer have access to the many charts I created in the years I worked there - I was the go-to person in my division regarding UM and UIM issues.

There are 4 separate coverages within the UM/UIM family of coverages. First, there is UMBI (Uninsured Motorists Bodily Injury) which is available in every state. In some states it is mandatory (but I forget if it is mandatory in Georgia, sorry) but even if it is optional, most people buy it. You have to buy at least the state's FR (Financial Responsibility, or minimum limit) and can buy as much as the BI limit you have, or any limit in between. That is typical of any state, even in states where UMBI is optional itself. UMBI will pay for not only economic damages such as medical and wage loss, but also for pain and suffering.

Next is UIMBI (UnderInsured Motorists Bodily Injury). This coverage is available in all states. In many states, it is sold as part of a package with UMBI. In some states, it is sold as a stand-alone coverage. In some states, it is mandatory, in other states it is optional. In nearly all states, the same rules about the limits you can buy are the same as those for UMBI. UIMBI is a more complicated coverage in the way the coverage is triggered and how much it can pay out. (I don't want to go into that right now.) Like UMBI, UIMBI will pay for economic losses and pain and suffering losses.

UMPD, or Uninsured Motorists Property Damage, pays for damages to your car due to an uninsured motorist. This coverage is not available in all states but is available in Georgia. (UMPD is sold in about half the states.) There is often overlap between UMPD and Collision although in some states UMPD is mainly available to those who do not buy Collision. From what I recall, UMPD is available to Collision buyers in Georgia. In some states, UMPD is part of a package with UMBI, whether or not UMBI is mandatory overall. UMPD has a deductible, sometimes the buyer has a choice of deductibles.

UIMPD, or UnderInsured Motorists Property Damage, pays for damages to your car from an underinsured motorist. This is a rather rare coverage, in most states it is not available. I am not sure if it is available in Georgia, but based on the OP's post, it is. This coverage tends to be sold in states which have low FR limits for Property Damage (PD) which have a higher likelihood of creating an underinsured situation. This coverage might be sold with UMPD as a package, or with UIMBI as a package. It is almost never sold as a stand-alone coverage.

As to the question of which of these 4 coverages I would buy if they were all optional, I would buy UMBI and UIMBI but not necessarily at the same limits as my BI liability coverage. As for UMPD and UIMPD, I would buy them only if I had already dropped Collision on my car already. UMPD and UIMPD tend to be cheap coverages so if I get hit by an uninsured or underinsured motorist, I would have some coverage.
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Old 09-27-2014, 02:27 PM   #6
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Here in Iowa there is no mandatory insurance law. So, I figure me and about a dozen other people actually have real insurance. Everybody else has none or some gratuitous, paltry amount of insurance. For $300,000 worth of un/under insured motorist coverage I pay $13.80 per year. Essentially zero for obsessive/compulsive peace of mind.
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Old 09-27-2014, 02:56 PM   #7
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Earlier this year my daughter was in an auto accident, where from a side street the other party improperly pulled out in front of her. Being at fault, the other parties insurance was on the hook. But, they only had the minimum coverage required by law. Arizona law requires only a minimum of $15,000 in injury coverage. Although my daughter was not seriously injured, just the ambulance trip & a few hours in the emergency room for evaluation was nearly $20,000. Our "under-insured" motorist coverage took care of the difference.

My daughter was driving an older vehicle, so the Arizona minimum vehicle coverage, which is $10,000 covered our vehicle. But if she had been driving a newer / more expensive vehicle, without under-insured coverage WE would have been "on the hook" for the extra cost.

In theory, the other driver is personally responsible for costs beyond insurance coverage, but, it depends on the assets of the other party. If they're already broke, there's not much point in a lawsuit.
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Old 09-27-2014, 02:58 PM   #8
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According to my quick research, only Virginia, New Hampshire, and Mississippi do not have mandatory insurance laws. They have other forms of mandatory personal repsonsibility, though.

Vehicle insurance in the United States - Wikipedia, the free encyclopedia
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Old 09-27-2014, 03:30 PM   #9
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According to my quick research, only Virginia, New Hampshire, and Mississippi do not have mandatory insurance laws. They have other forms of mandatory personal repsonsibility, though.

Vehicle insurance in the United States - Wikipedia, the free encyclopedia
Ripped from Today's headlines:

Iowa's motor vehicle financial responsibility law -Iowa Motor Vehicle Division

Driver protection
If you are involved in an accident as either the driver or owner of a motor vehicle, or if your license has been suspended or revoked, you must show financial responsibility.
Iowa does not have a compulsory insurance law. Instead, the Financial and Safety Responsibility Act protects you from the financially unsound and reckless driver. It does this by:

Suspending the operating and registration privileges of a driver or owner who has not been able to show immediate financial responsibility following an accident; and

By requiring anyone whose driver's license has been suspended or revoked because of a conviction, unsatisfied judgment or violation of the OWI law to prove financial responsibility for any future damages or injuries that driver may cause.


Every single state has some sort of perfunctory "financial responsihillbillity" law even if they do't actually force you to buy insurance.
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Old 09-27-2014, 04:00 PM   #10
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"Also, in Georgia it's estimated that about 11% of driver (as of 2012) don't have ANY insurance, so the odds of being hit by an uninsured motorist is remote."


Maybe so in Georgia , Here in Los Angles, about 40% of the cars ON THE ROAD at any one time are un insured, and about half of those aren't even currently registered. And these drivers cause a disproportional number of collisions, especially hit n run.

Here in CA , un-insured motorist only applies if the driver and car owner can be identified, so hit n run , you are going to be using your own collision coverage.

Just mt 2 cents worth , from the Left coast.
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Old 09-27-2014, 04:24 PM   #11
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Originally Posted by FlyBoy5 View Post
I have been reading quite a bit of a blog (can't recall the name) that was mentioned here in the forums. He's a patent attorney that lives in Georgia and hands out advice for all sorts of things. One thing he mentions that carrying uninsured/underinsured coverage is a real waste of money. He basically said that this is nothing more than giving you the "right" to sue your own insurance company.

So...my hypothetical is that I don't need this coverage. It is a sizable expense and I assume that since I carry comp/collision, the UIM is really of little value. If someone hits me and runs off, then I am able to file a claim under the comp coverage (although minus the deductible). Also, in Georgia it's estimated that about 11% of driver (as of 2012) don't have ANY insurance, so the odds of being hit by an uninsured motorist is remote.

Another argument for HAVING UIM coverage is for medical payments. However, it appears that most of the medical coverage is usually in the neighborhood of 25K, which is pretty low. Also, I have excellent health coverage, so even if I had to absorb these costs, the maximum out of pocket would be relatively low.

What is the opinion of some of you smarty folks out there?
First - disclaimer. I'm not your lawyer or your insurance agent. Laws on automobile insurance vary from state to state. Policies vary from state to state. Therefore, for individual advice you should get advice from someone knowledgeable in your state.

Second -- I don't if the 11% number is accurate or not. However, it is common that many (and I would guess most -- although I don't know) people who do have insurance have the minimum. I don't know that the minimum is in your state. But, let's say the minimum is $30,000. That is a trivial amount in the event of any serious injury. If you have underinsured motorists coverage of more than that, then you get a benefit in that event.

Third - Medical Payments coverage is entirely different in my experience from Uninsured/underinsured motorist coverage. So, the limit on medical payments coverage on my policy anyway has zero to do with how much medical costs will be covered under the UIM coverage.

Fourth - Yes, many people do have medical insurance that would coverage injuries in an automobile accident. However -- depending on your state law -- what you can recover under Uninsured/underinsured coverage may go well beyond that (again, depending on state law). For example, pain and suffering. You may think that would be a trivial amount. But, imagine a serious injury with lifelong consequences. Pain and suffering can be a significant amount of recovery.

Also - depending on your situation and state law -- there may be other things recoverable such as loss of income.

Basically, you can decide that UIM coverage isn't worth it and that's fine. But, I think you are seriously underestimating what may be recoverable. I suggest you look into what is recoverable in your state before you decide it isn't worth anything.
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Old 09-27-2014, 05:03 PM   #12
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From my review of policy limit distributions over the years, most of those who buy insurance buy liability limits well above the minimum, or FR lmits. The most common limits purchased were 50/100, 100/300, and 250/500. FR limits such as 10/20, 15/30, 20/40, or 25/50 were rarely bought except by those in the Assigned Risk (A/R) market. Those in the A/R market are those drivers with terrible driving records who insurers refuse to write policies for and are therefore "assigned" to various insurers by the state in return for being able to charge a LOT more than those in the voluntary insurance market. A/R drivers alomst always buy the minimum because they pay an arm and a leg just for minimum coveragte.
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Old 09-27-2014, 05:52 PM   #13
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Uninsured Motorist insurance has always confused me. I have 250/500 underlying insurance and a $2 million umbrella policy. From what I've been told by my insurance agent, the Uninsured Motorist coverage will only cover medical type expenses for people in my car. I have medical coverage already as would passengers in my car. UM is not required in my state. If an uninsured driver hits me, I've been told that my collision policy would cover it fixing my car. I suppose I could benefit if pain and suffering were taken into account, or maybe some out of work payments (although I have disability insurance for that). Not sure that I need it.

It must be different by state.
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Old 09-27-2014, 08:28 PM   #14
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Here is a pretty good overview of UM insurance from the Ohio Bar Association:
https://www.ohiobar.org/ForPublic/Re...anUse-688.aspx
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Old 09-27-2014, 10:02 PM   #15
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"Also, in Georgia it's estimated that about 11% of driver (as of 2012) don't have ANY insurance, so the odds of being hit by an uninsured motorist is remote."


Maybe so in Georgia , Here in Los Angles, about 40% of the cars ON THE ROAD at any one time are un insured, and about half of those aren't even currently registered. And these drivers cause a disproportional number of collisions, especially hit n run.

Here in CA , un-insured motorist only applies if the driver and car owner can be identified, so hit n run , you are going to be using your own collision coverage.

Just mt 2 cents worth , from the Left coast.
Thanks for all the advice everyone, I certainly appreciate it. I will dig a little more and figure it all out eventually.

As for the 11%, this was a figure supplied from Uninsured Motorists | III

California is showing 14.7% which doesn't look like 40% to me.
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Old 09-27-2014, 10:24 PM   #16
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From what I've been told by my insurance agent, the Uninsured Motorist coverage will only cover medical type expenses for people in my car..
And this is HUGE!
I have been involved into a major car accident, the friend in my car nearly was left paralyzed and I have been disabled, went thru surgery etc. The accident was not my fault and yet what I took away from it - always buy UIM coverage. I have now $250K/$500K + $250K UMI (max it can't be more than policy coverage) and cost $23 per 6 months (CA) - I think it's no brainer.
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Old 09-28-2014, 07:54 AM   #17
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The % of uninsured motorists can vary a lot within a state. Lakewood wrote that 40% of the drivers in L.A. are uninsured. I don't know if that is true, but it is a safe bet that L.A. has a higher % of uninsured drivers than California on the whole. From my review of uninsured drivers in my career, the urban areas always had higher rates of uninsured drivers than rural areas.
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Old 09-28-2014, 09:54 AM   #18
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According to my quick research, only Virginia, New Hampshire, and Mississippi do not have mandatory insurance laws. They have other forms of mandatory personal repsonsibility, though.

Vehicle insurance in the United States - Wikipedia, the free encyclopedia
That seems out of date, we have had mandatory insurance requirements since 2001.

https://www.mid.ms.gov/pages/Compuls...Insurance.aspx

We had a large population of uninsured drivers, probably still do. The minimum requirements aren't much more than not having any.
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Old 09-28-2014, 11:39 AM   #19
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Thanks for all the advice everyone, I certainly appreciate it. I will dig a little more and figure it all out eventually.

As for the 11%, this was a figure supplied from Uninsured Motorists | III

California is showing 14.7% which doesn't look like 40% to me.
I would agree with the statewide average of 14.7%. In urban areas , lot's of unlicensed and/or uninsured folks driving around. L.E. , (with the exception of the CA Highway Patrol , The CHP enforces everything vigorously ) routinely
ignores this, by "un-written dept. policy" . It's a real pain to stop someone for expired tags, then finding the car is not reg , the driver is not licensed , etc. A real mess , takes up hours of the shift. And many local politicians frown upon this type of enforcement. Defensive driving is the best insurance for the urban areas.
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Old 09-28-2014, 11:47 AM   #20
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My DS was t-boned by a 15yo who was fleeing the police at 85 mph. He almost lost his life and I am thankful that we had un/under insured coverage. Big medical bills, pain suffering, scarring, lost 1 year of college, etc. The kid who hit him had stolen his parents car without permission, and they only had $50K in coverage and no assets that we could go after. I am glad that we at least had $300K in un/under insured motorist coverage which we fully collected on, plus the $50k from the other kids coverage. Also, don't assume your own medical insurance company won't seek reimbursement for medical expenses from any proceeds that you receive, as they will want to be paid back.

After that experience, I increased coverage to $500K for accidents caused by un/under insured drivers. Also, here in Texas, many are driving illegally with no insurance. I am not sure of how things work in other states, but here is Texas, I would not want to be without it.
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