Uninsured/Underinsured Motorist Coverage... yea or nea?

[pb4uski]

I was talking with a friend this morning comparing notes as we are both shopping for car insurance. He said that his agent asked him whether they were on Medicare and he responded yes, and the agent said that many of his customers on Medicare were dropping UI coverage. It sort of makes sense, though there would be some risks that one might want coverage for. I found this: https://www.weshopinsurance.com/new...you for injuries,driver (not enough insurance).

I have medical insurance. Why should I buy uninsured motorist coverage?

Medical bills are only a portion of what you can claim on uninsured motorist coverage. UM also pays for things like….

· loss of the future enjoyment of life
· lost wages and disability
· Long term nursing care
· wheelchairs and medical devices
· Pain & suffering
· Death
· replacement services for things you are no longer able to do: yard service, cleaning, etc.
· retro-fit your house to accommodate disabilities caused by the auto accident

Most of the list above is not covered or are limited by medical insurance.

I'm thinking of at least reducing my coverage from $500k to $100k rather than eliminating it entirely. What do y'all think? Have any of you dropped UI because you have Medicare?

 

[Masquernom]

A friend of mine was hit on his motorcycle by a guy running a red light. The insurance company for the guy that hit him paid something like $30,000. My friends insurance agency paid him $100,000 under the UI portion of his policy. There are a LOT of drivers out there with no insurance now.
Insurance is required to get a tag for your license in my state. But, you can buy insurance, get your tag, and cancel the insurance for a refund right away.

 

[euro]

Too lazy to look it up, but I was under the impression that uninsured/underinsured motorist portion of my car insurance is a very small fraction of the total bill. How much do you save by taking on the extra risk?

 

[Surewhitey]

I was hit by one of the uninsured some time ago. Mine didn't cover contents damaged (laptop) and I was out $800. My wife (in insurance industry) will always recommend this coverage. I would consider not having it if my car value was really small compared to the policy costs, personally.

 

[REWahoo]

Too lazy to look it up, but I was under the impression that uninsured/underinsured motorist portion of my car insurance is a very small fraction of the total bill. How much do you save by taking on the extra risk?

^ This. My uninsured/underinsured motorist premium is less than 5% of my total bill.

 

[harley]

Too lazy to look it up, but I was under the impression that uninsured/underinsured motorist portion of my car insurance is a very small fraction of the total bill. How much do you save by taking on the extra risk?

Same here. I wouldn't drop it to save the price of a couple of pizzas, but if it would save me $100/year I'd consider it.

 

[pb4uski]

Too lazy to look it up, but I was under the impression that uninsured/underinsured motorist portion of my car insurance is a very small fraction of the total bill. How much do you save by taking on the extra risk?

$500k coverage is $161/year. I haven't priced $100k of coverage.

 

[harley]

Made me check, and wow! I'm paying $360/year per vehicle for $1M/$1M coverage. That's on 4 vehicles. Time to talk to my agent. Anther beer I'll be owing PB4 next time we can get together in SWFL.

 

[RunningBum]

I pay $40/year for 250/500/100 for UI. $20 for each of two cars.

 

[VanWinkle]

Just checked and I am paying 17.00 every 6 months for 250/500 on UM/UIM.

It is a money decision and I would not change to save 17 bucks in my case.

It may be you need to re-shop your rates if you are over paying for UM/UI

 

[Mark1]

Dropped my UM/UIM years ago, as I don't mind self insuring for the list outlined above. As I remember, when we moved to CO back in 2016, I had to sign off that I was rejecting UM/UIM coverage.

 

[scrabbler1]

PB, you listed several items which UM/UIMBI covers but medical insurance does not. If your state doesn't require it to be bought, those are good reasons to buy it anyway.


As for which limits, you don't have to buy it at the same limits you have for your BI coverage. You can reduce the limits as long as they are at least the state's minimum FR (Financial Responsibility) limits.


Back in my working days, I worked in the actuarial field, specializing in personal auto insurance, and I was the go-to person for UM/UIM issues for several years. There are actually 4 coverages within the UM/UIM world, and they vary from state to state.


UMBI covers you for Bodily Injury-related damages caused by an uninsured motorist. It's pretty uniform from state to state although the FR limits can vary.


UIMBI covers you for Bodily Injury-related damages caused by an underinsured motorist. That is, the other driver has some BI coverage but not enough coverage. How this coverage applies can vary from state to state, so its price can also vary.


UMPD covers you for property damage (usually your car) caused by an uninsured driver. This coverage is not available in all states. It sometimes overlaps with your Collision coverage, if you have it. There are some other, smaller wrinkles with this coverage.


UIMPD covers you for property damage caused by an underinsured driver. This coverage is not available in many states. Like UMPD, it can also overlap with your Collision coverage. It has some of the same wrinkles as UIMBI.


What you pay for the 4 UM/UIM coverages is based mostly where you live, if you are buying a single-car or multi-car policy, the type of UIM in your state, if there is stacking of multi-car policies (a big wrinkle), and some smaller features for UM/UIMPD. What limits you buy also matters, of course.


In some states, these 4 coverages are sold separately. In other states, 2 or more of them are sold together. In some states, you have to buy one or more of them. In other states, it's all optional. UM/UIMPD is rarely mandatory if even offered.


I have 50/100 for my UM/UIM (BI only), lower than my 250/500 BI. I pay about $35 per year for one car, the lowest in 10 years.

 

[TriumphTR3fan]

Uninsured motorist coverage pays for Long Term Care if you’re injured. Your question involved Medicare, which does not pay for LTC. Dropping UI just adds risk that seniors don’t need.

 

[harley]

Very strange. I talked to my FL agent, and it appears that uninsured motorist coverage is almost half of my total premium. I looked into dropping it from $1M/$1M to $100K/$100K, and it would decrease the cost by about 35%. Basically from $360/year/vehicle to $220/year/vehicle. That's significant but I'm not sure if it's worth the decrease in coverage. I'll have to think about it.

I'm assuming there's a major issue with uninsured motorists in FL, compared to what I'm seeing others here talking about.

 

[scrabbler1]

Very strange. I talked to my FL agent, and it appears that uninsured motorist coverage is almost half of my total premium. I looked into dropping it from $1M/$1M to $100K/$100K, and it would decrease the cost by about 35%. Basically from $360/year/vehicle to $220/year/vehicle. That's significant but I'm not sure if it's worth the decrease in coverage. I'll have to think about it.

I'm assuming there's a major issue with uninsured motorists in FL, compared to what I'm seeing others here talking about.

Florida has stacking, at least on an optional basis. Stacking will boost the rate for UM and UIM. If you live in an urban part of Florida, that will also boost the rate. I don't recall the type of UIM in Florida (is it the broader, costlier type of UIM coverage?). You could be three for three on the high-cost hit list.

 

[jim584672]

I was on GEICO's web sight and tried to remove the SUM coverage and it wouldn't let me. Called them, they required a letter from me due to some state regulation. Eventually it got removed. I'm not driving much now so all I want is liability.

 

[Secondact]

Insurance agent here. Some states require uninsured motorist coverage, so you may not have a choice about paying for it. This covers injuries to you and passengers if you’re in a car accident caused by:

• A driver who doesn’t carry any liability car insurance.
• A driver who doesn’t have enough liability insurance to cover your medical bills.
• A driver whose insurance company denies coverage or goes out of business.

Uninsured motorist coverage can pay for:

• Medical bills.
• Lost wages if you can’t w*rk because of the car accident.
• Pain and suffering compensation.
• Funeral expenses.

I strongly recommend the coverage for all of my clients. About 15% of drivers carry no insurance and a significant percentage carry state minimum limits. Medicare or health insurance will not cover long term nursing care, nor will it compensate for life changing injuries.

 

[athena53]

It's complicated. The article below notes that Medicare will pay for auto-accident injuries but then will claim repayment from any payments made by the at-fault driver.

https://www.sutliffstout.com/houston-car-accident-lawyer/medicare-cover-car-accident-injuries/

What they don't address is what happens if the at-fault driver is uninsured or under-insured. If their insurance pays out $25K and your injuries were $100K do they go after you or the at-fault driver or do they just eat it?

I buy the coverage but it's sad to see how much the price has gone up- it used to be VERY cheap but with so many people shirking their responsibilities to buy insurance the cost has increased. Most states also keep required limits crazy low as a way to make it easier to afford the required coverage, but that just leaves a bigger gap to fill with Uninsured Motorists coverage.

And my Umbrella policy does not extend to UM/UIM.

 

[Secondact]

It's complicated. The article below notes that Medicare will pay for auto-accident injuries but then will claim repayment from any payments made by the at-fault driver.

https://www.sutliffstout.com/houston-car-accident-lawyer/medicare-cover-car-accident-injuries/

What they don't address is what happens if the at-fault driver is uninsured or under-insured. If their insurance pays out $25K and your injuries were $100K do they go after you or the at-fault driver or do they just eat it?

I buy the coverage but it's sad to see how much the price has gone up- it used to be VERY cheap but with so many people shirking their responsibilities to buy insurance the cost has increased. Most states also keep required limits crazy low as a way to make it easier to afford the required coverage, but that just leaves a bigger gap to fill with Uninsured Motorists coverage.

And my Umbrella policy does not extend to UM/UIM.

They usually end up eating it. That's why it's pricey. If the at-fault part can't afford insurance they are usually judgement-proof. You can add UM/UIM to your umbrella, depending on your state and carrier.

 

[pb4uski]

Big thank you to all respondents, especially scrabbler1 and Secondact. Still mulling what to do, but I'm thinking that I don't need $500k of coverage.

And harley, just one beer? Seriously? I agree that there are probably a lot of un/under-insured in FL, so that is a consideration.

BTW, its always seemed odd to me how the insurance companies differentiate between uninsured and underinsured... wouldn't the uninsured be underinsured by default? I think it is just a ploy to make it more complicated and charge you another premium.

 

[scrabbler1]

BTW, its always seemed odd to me how the insurance companies differentiate between uninsured and underinsured... wouldn't the uninsured be underinsured by default? I think it is just a ploy to make it more complicated and charge you another premium.

From my actuarial days, I can tell you that UMBI and UIMBI are priced much differently from each other. UIM assumes the other (at-fault) driver has some insurance but not enough of it. Combine that with the 3 ways the UIM coverage can kick in (and if there is stacking) and you end up with a rather complicated coverage to price.

UM and UIM are often sold together as a package. But in some states they are sold separately, without any law to require purchase of both (or neither). The huge number of different permutations with regard to the 4 UM/UIM coverages made maintaining programs and a description of the pricing for the regulators and insurance companies a major project, one I oversaw for many years in my career.

 

[Koolau]

90 degrees to this discussion (what else is new for Ko'olau?): Not sure here in Paradise, but in my last state, insurance companies were required to contact the state or DMV or whatever whenever someone dropped their insurance coverage. I assume folks could change from high coverage to minimum and not be reported.

That state had minimum requirements of auto insurance to get (IIRC) DL and Registration. Dropping coverage could result in suspension.

Before this rule, MIL (note I didn't say DMIL) let her insurance lapse. She got pulled over for a minor infraction and lost her DL for 3 months because she had no insurance. Good idea. BETTER idea is new rule to force insurance co. to contact the state. IIRC, dropping one insurance co. but picking up a new one involved some paperwork so that state was aware. YMMV

 

[scrabbler1]

90 degrees to this discussion (what else is new for Ko'olau?): Not sure here in Paradise, but in my last state, insurance companies were required to contact the state or DMV or whatever whenever someone dropped their insurance coverage. I assume folks could change from high coverage to minimum and not be reported.

That state had minimum requirements of auto insurance to get (IIRC) DL and Registration. Dropping coverage could result in suspension.

Before this rule, MIL (note I didn't say DMIL) let her insurance lapse. She got pulled over for a minor infraction and lost her DL for 3 months because she had no insurance. Good idea. BETTER idea is new rule to force insurance co. to contact the state. IIRC, dropping one insurance co. but picking up a new one involved some paperwork so that state was aware. YMMV

In my actuarial career, I remember working on some responses to state law changes which strengthened their mandatory car insurance laws. There was a study which showed that one of the top measures to reduce the rate of uninsured drivers was the addition of a requirement for insurance companies to notify state DMVs when an insurance policy was canceled. This was in the early 1990s when these types of technological improvements were becoming more common, and the study showed the rates of uninsured drivers in several states before and after this key change was made, with large drops in the UI population.

Simply reducing one's limits as long as all mandatory coverages are bought and at limits at least as high as the state's minimums (FR, Financial Responsibility) would not trigger such a report.

 

[MarieIG]

I max out. Seems odd to have high BI limits for everyone else, but not for my own family.

 

[street]

Interesting!
I will look to see what I have for coverage and costs sometime. Two years ago I visited my policies and made some changes, can't remember what thou. I do know I have an umbrella policy if not covered by the policy itself.

I'm one not to take an risk when it comes to this kind of thing. I would rather be over insured then under. To many people on the roads that shouldn't be driving because of their bad habits.