Purchasing Uninsured and Underinsured motorist (“UM/UDM”) coverage is a critical way to protect loved ones and yourself. It applies when you or a family member are a driver, a passenger in your or another car, when you are next to a car, or on a bicycle, or even walking as a pedestrian and if you or a family member are hurt by another motor vehicle. If the person causing the incident, the defendant, either has no or inadequate liability insurance coverage to compensate for damages including death, then you need UM/UDM coverage through your own insurance carrier.
This coverage has a number of nuances and complications, three of which we will discuss. First, what amounts should you purchase?
It is highly advisable that you purchase UM/UDM coverage in at least the same amounts as your liability coverage. Liability coverage applies if you or a family member are at fault (liable) and cause harm or damages to others.
At one time insurance agents had to offer UM/UDM coverage in the same amounts as your liability coverage; and if you rejected it or chose lesser amounts, then the rejection or reduction had to be in writing. In other words, the consumer, the client needed to be informed and armed with this knowledge in order to decide what to do. Those days are gone. An agent generally does not need to educate a client in this manner. Consequently, many consumers do not even know what this coverage is much less make an informed decision about how much to buy.
Second, many people believe they have “full coverage” but in actuality do not know the amounts. Full coverage can be akin to wearing shorts and a T-shirt or full body armor. Unfortunately, in rural areas, for example, over 15-20% of drivers do not have any liability insurance.
One would have wished they purchased higher amounts, such as $300/500k or higher. As a result, it is critical to speak with your agent about what amounts you need and can afford.
In sum, review your policies with your agent and ascertain the answers to this checklist:
a. Do I have adequate liability coverage? If not, do I have personal exposure? Said differently, can someone come after my assets and income because I did not purchase sufficient insurance?
b. Do I have UM/UDM coverage and, if so, how much do I have and should I increase the amounts? Reviewing with your agent your combined family incomes, assets, your budget and other needs and concerns should allow you to engage in excellent decision making. Remember, the UDM limits should be equal to your liability coverage.
If you need further assistance and/or if you have any questions about this, feel free to contact us:
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Delano, CA 932151
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Wasco, CA 93280