Uninsured and Underinsured Motorist Coverage

 

You might think that a recession and downturn in the economy have nothing to do with car and motorcycle accidents. After all, you have to stop at a red light and yield to oncoming traffic whether or not you have money in your bank account. However, while a driver who is cutting back on expenses may not be any more or less negligent because of that, it may affect his ability to pay.

When people start to cut expenses, one place they see to cut is their insurance costs. Although liability insurance is required in North Carolina, the minimum limits required are only $30,000 per person and $60,000 per accident. As the economy gets worse, more people will only pay a premium for the minimum coverage required. If you have a serious accident, with permanent injuries, $30,000 may not even cover your medical expenses, much less pain and suffering and future expenses. If the negligent driver has no personal assets, even if you can prove high damages, you probably won’t be able to collect it. One way to protect yourself is to have adequate levels of Uninsured and Underinsured Motorist Coverage.

Uninsured Motorist Coverage (UM) and Underinsured Motorist Coverage (UIM) is a bit complicated, and I would recommend you get the advice of an attorney familiar with the statute if you need to make a claim for it. However, basically, UM is part of your personal automobile insurance policy that pays you for your damages when the other negligent driver has no insurance. Similarly, UIM covers you for your damages in excess of the negligent driver’s liability coverage. For example, if a driver runs a red light and hits you, and you sustain medical bills and pain and suffering of $100,000, but the negligent driver only has $30,000 in coverage, once that $30,000 has been paid, your insurance company would pay the remainder.

In North Carolina, UM and UIM are required to be offered when you purchase or renew insurance, but you do not have to accept it. In my opinion, especially in these times, the dollars you save by not paying the added premium for UM and UIM coverage are not worth the risk of a bad accident with a negligent driver who has no ability to pay your damages.