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Uninsured Motorist Coverage Might Be Optional But You Need It!
by Ken May

Uninsured motorist coverage protects you if you are in an accident with an at-fault driver who doesn’t carry liability insurance. Underinsured motorist coverage steps in when you are in and accident with an at-fault driver who has liability insurance but the amount he has is too low to cover the damage to your car or your medical expenses.

Generally speaking, most drivers carry both uninsured motorist and underinsured motorist coverage on their auto insurance policy. We always recommend matching the uninsured motorist limits to the liability limits on the policy though some people opt to have lower limits of uninsured motorist coverage.

Those that decide to have lower limits of uninsured/underinsured motorist coverage than their limits of liability or decide not to have uninsured/underinsured motorist coverage completely are required to sign a waiver form. It’s such an important coverage that to not have it, or have less of it, every insurance company requires a signed form attesting that the policyholder knows and understands that the coverage was removed or lowered.

Q.  Why should I carry uninsured/underinsured motorist coverage if liability coverage is required by the State of California?

A.  There are two reasons to carry the coverage. First, despite it being the law to carry at least basic limits of liability coverage on your auto policy on each car, the statewide average of uninsured drivers on the road is 25%. It’s higher in certain areas of the state. The uninsured motorist rate in Los Angeles for instance is 33%.

The second reason is that many people carry only basic limits of liability such as $15,000/$30,000/$10,000 (15/30/10) or $15,000/$30,000/$5,000 (15/30/5). Simply put, the other guy’s insurance company must pay up to $15,000 if one person in your car is injured. And, if more than one person is hurt in the accident, the other guy’s company is only required to pay a total of $30,000 no matter how many are hurt.

Do you think that $15,000 is enough to handle medical expenses if one person in your car is injured if hit by an uninsured motorist? And do you think that $30,000 is enough if two or more people are injured in your vehicle if an uninsured motorist slams into you? This is why you want uninsured and underinsured motorist limits which are higher than the basic 15/30 limits. That way, you will have protection for you and other people in your car when hit by an uninsured driver.

Q.  What if my car is stolen? Can I file a claim on my uninsured motorist coverage?

A.  We see this more often than you would think. In most states, you are allowed to file a claim on your uninsured motorist coverage for reimbursement for a stolen car. But California is different (of course). The only way that an insurance company will pay out on an uninsured motorist claim in California is if it can be proven that the other driver did not carry liability insurance. So, if somebody steals your car, he or she is gone, likely to a chop shop or to Mexico and you will likely never see your car again. Or if the car is recovered, it will likely be stripped of parts to the point where it is deemed to be a total loss. So, in either of these events, there is no coverage under your uninsured motorist (these would both be comprehensive claims but if you did not carry comprehensive coverage on the stolen vehicle, you won’t receive anything from the insurance company).

Q.  Do you have clients who opt not to purchase uninsured/underinsured motorist coverage?

A.  As a general rule, we will not quote somebody without this important coverage but we have possibly two or three clients who insisted on signing the waiver form to save the money. Most of our clients who don’t have a lot of assets to protect will still insist on having the coverage because they know many people who are uninsured. It’s the smart thing to do.

So, what do you think? We would love to hear your stories, comments, or questions about uninsured/underinsured motorist coverage and will do our best to respond.

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