The state of California has laws in place that require you to carry liability car insurance coverage. If you’re smart, though, you’ll go beyond those requirements and opt for both uninsured and under-insured motorist coverage! Why?
In order to answer that question, we need to talk about what uninsured motorist coverage actually does…
Uninsured motorist coverage (often called “UM Coverage” in the insurance world) comes into play if you get into an accident with someone who doesn’t have any insurance. Think the odds of that happening are low? Think again! According to the California Department of Insurance (CDI), 1 out of every 7 U.S. drivers is riding around without any insurance. Here in California, it’s estimated that a whopping three million drivers don’t have any insurance! When you look at it that way, it’s not a matter of IF you’ll get into an accident with an uninsured driver, but WHEN.
Let’s say you’re sitting at a red light on your way to work one morning, when someone plows into the back of your car. The other driver is clearly at fault, but if he doesn’t have any insurance, you won’t be able to collect any money for your injuries from him. Sure, you could sue him for the money, but even if you win — and even if he has the money to pay the judgment that you won in court — the lawsuit would take years to resolve. You don’t have that kind of time. You’ve got injuries that need attention now!
That’s where your uninsured motorist coverage would come into play. You’d wind up getting money for your injuries under your own insurance policy. That way, you wouldn’t be left high and dry by a driver who was breaking the law when he hit you.
How much money would you get?
That depends on your specific insurance policy. You can choose the exact limits you want when you buy your policy, and the coverage you get will pay for things that the other driver’s insurance would have — like your medical bills, a ride in an ambulance, and any prescriptions you might need in the aftermath of your injury. The only thing it likely won’t cover? Your property damage. This can vary from policy to policy, though, so talk to your agent to see exactly what kind of coverage your specific policy will provide. (Most likely, you will have to add uninsured motorist property damage coverage to your policy.)
Aside from the added peace of mind, uninsured motorist coverage comes with another big benefit — it’s usually cheaper than the liability insurance that the state requires you to purchase. So, you’ll have a whole lot more peace of mind without spending a whole lot more money!
And, as an added benefit, uninsured motorist coverage doesn’t just protect you when you’re driving your car. It can also come into play if you’re a pedestrian or a bicycle rider who gets hit by an uninsured driver.
Just remember — in any of these cases, you’ll only be able to take advantage of your uninsured motorist coverage if the other person was at fault!
OK, so how does under-insured motorist coverage (UIM Coverage) work?
Like the name implies, it protects you against drivers who don’t have enough insurance to cover the injuries that they’ve caused in an accident. For example, if the other driver only has $15,000 in liability insurance for injuries — which is all that the state of California actually requires — and you have $30,000 worth of medical expenses from your injuries, you’re out of luck. You’ll only get $15,000 from the other driver’s insurance company, and you’ll be forced to figure out how to pay the rest of your bills on your own.
Sounds terrifying, doesn’t it?!
But if you had underinsured motorist coverage, your own insurance company would step in and pick up the financial slack. Just like with uninsured motorist coverage, the actual dollar amount that your insurance company would pay would depend on the specific limits you created when you first purchased your policy.
There’s a catch, though. Here in California, you’re only able to tap into your underinsured motorist coverage if your policy limits are higher than the other driver’s. So, if he has $15,000 in bodily injury liability coverage and you only have $10,000 in underinsured motorist coverage, you wouldn’t receive anything from your insurance company. But if you had $20,000 in underinsured motorist coverage, you’d have access to your benefits. Specifically, you’d have access to $5,000 — the difference between the two limits. That’s why it’s so important to pick the right underinsured limits when you buy your policy! The decision you make today could have a major effect on your life later, so it’s crucial to find an insurance agent who can help you set everything up the right way.
What about property damage?
The only way that damage to your car will be covered is if you have underinsured motorist property damage coverage. But in some cases, this coverage won’t just apply to the damage to your car itself. Instead, it can step in and pay for other items that were damaged in your car during the accident — like the computer you had in the trunk, or the cell phone that flew out and shattered when the window broke.
No matter which type of coverage you need to tap into, you’ll work with your own insurance company. After all, this is coverage that you’re paying for under your own policy. So, you’ll handle all of these claims through them — which is yet another reason why having a great agent is so important!
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