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Uninsured and Underinsured Automobile Insurance: Why You Need It

By Allen Flatt Ballidis & Leslie on June 1, 2019

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Auto insurance is mandatory in California and most other states. But people don’t like to spend a lot of money on something they may never need or use. That type of mindset often causes drivers to opt for the minimum coverage allowed by the state, or to buy discount insurance they see advertised on TV. But as your grandmother may have said to you when you were a kid, there’s such a thing as being “penny wise and pound foolish.”

An estimated 15% of California drivers defy the law and carry no auto insurance (California has more uninsured drivers than any other state). Many others carry only the minimum coverage.

California requires that drivers carry, at least, what is commonly referred to as “15/30/5” automobile liability insurance. This means that if a driver with insurance causes an accident, his insurance company will pay the victim a maximum of:

  • $15,000 per person for bodily injury or death.
  • $30,000 per accident for bodily injury or death (this is the total for all occupants of the other vehicle).
  • $5,000 for property damage to the other vehicle.

Keep in mind that, without insurance, a broken leg that requires surgery will cost $17,000 to $35,000 to repair, depending on the severity of the break and what procedures are required. Motor vehicles often cause multiple fractures and other more serious injuries that will result in much higher medical costs. Also keep in mind that in California, the cost of a day in a state or local government hospital will be about $3,000, and close to $4,000 in a nonprofit hospital.

If you have health insurance, or are covered by a government program like Medicare or Medi-Cal, that should cover your medical bills. However, you may have to pay high deductibles and co-pays. Also, your health insurance will not cover any lost wages from missed work or pay for repairs to your vehicle.

Protecting Yourself from Uninsured Drivers

The State of California requires all automobile companies to offer you Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage. In fact, unless you decline UM/UIM coverage in writing, it is included in your policy. UM insurance covers you and passengers in your vehicle if you’re in an accident caused by a driver with no auto insurance. If you are in an accident caused by a driver with the minimum coverage required by law (15/30/5), UIM coverage will kick in once the at-fault driver’s policy limits are met.

For example, suppose you and a passenger are injured by a driver carrying the minimum coverage. The combined cost of both of your injuries is $50,000. The at-fault driver’s insurance company is only obligated to pay $30,000 (the single accident limit) to you and your passenger ($15,000 each). Without UIM insurance, you would each be stuck with $10,000 in medical bills to pay out of your own pocket. But if you had UIM insurance, it would pay the difference between the at-fault driver’s limits and your total medical costs.

Other Reasons to Invest in UM/UIM Coverage

  • Generally, UM/UIM insurance is fairly inexpensive. On average, the cost of UM/UIM coverage is only about 5% of your total premium. So, if you’re paying $1,000 a year for auto insurance, UM/UIM coverage would only add about $50 to your premium.
  • UM/UIM insurance doesn’t just cover medical bills and property damage; it covers all provable losses. For instance, if your injuries keep you from working for an extended period of time, UM/UIM can cover some or all of your lost wages.
  • UM/UIM insurance will cover anyone driving your vehicle, as well as the passengers they are driving, providing you’ve given them express or implied permission to do so.
  • If you are involved in a hit-and-run accident, and the hit-and-run driver is not caught or identified, UM/UIM will cover your losses.
  • You don’t have to be in your vehicle to be covered. UM/UIM insurance covers you whenever you’re struck by a vehicle. This would include when you’re struck while a pedestrian, riding a bicycle, skateboarding, pumping gas, or even sitting on a bench waiting for a bus.

In California, insurance companies usually offer their customers UM/UIM coverage that is equal to their liability policy limits. So, if you carry the minimum liability coverage with 15/30/5 policy limits, your UM/UIM policy limits will be the same. But as we discussed earlier, $15,000 per person, $30,000 per accident, and $5,000 for property damage won’t go very far after a serious accident where you incur extensive medical bills and lost wages. Since so many California drivers are uninsured or carry the state’s minimum coverage, you would be wise to boost your policy limits up to a higher level, such as 50/100/25 or 100/300/50. To find out what policy upgrade would be best for you and your family, contact your insurance agent.

Why You May Need an Attorney

Many people are under the assumption that insurance companies—both theirs and the at-fault driver’s—have their best interests at heart. Unfortunately, this is not always the case. Some insurance companies will offer accident victims a payout that is far less than worthy of their injuries and losses. An experienced personal injury lawyer can see that this doesn’t happen.

If you have been injured or lost a loved one in a car crash in Orange County, the legal team at the Newport Beach office of Allen Flatt Ballidis & Leslie can answer any questions you may have about seeking fair compensation for your losses. Call (949) 752-7474 for a free consultation.

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