Car Accidents - Underinsured Motorist Coverage 101
Most people think that the purpose of automobile liability insurance is to protect your assets in the event you have caused personal injury to someone in a car accident. This is certainly a purpose of liability insurance and the more assets you have, the more insurance you need.
But there is another purpose to automobile liability insurance and another reason to obtain one with a higher liability limit - to protect you and your family from a negligent driver who has inadequate insurance coverage.
The reason why a higher liability policy is important is that it allows you to purchase additional Supplemental Uninsured Motorist Coverage/Uninsured Motorist Coverage - known as SUM/UM coverage. SUM coverage is insurance coverage which may protect you in the event you suffer personal injury in a car accident and the driver responsible for the accident does not have adequate insurance to compensate you for your injuries.
Currently, the minimum statutory liability insurance required is only $25,000 per person and $50,000 per car accident. Unfortunately, this amount is much too low and many persons that do not have SUM/UM coverage who sustain personal injury in a car accident will end up grossly undercompensated.
Imagine that you have been rear ended at a high rate of speed. You sustain personal injury consisting of several broken bones and are out of work for several months. Your injuries are valued at over $100,000. The driver who hit you has only $25,000 in liability coverage. Unless the driver owns substantial assets, without SUM coverage, you may only receive $25,000 for your personal injury. If, however, you had SUM coverage of $100,000, you could make a claim under your SUM policy for the remaining $75,000.
You can determine the amount of SUM/UM coverage which you have by looking at the declaration page of your insurance policy or by contacting your insurance agent. You should seriously consider having an absolute minimum of $100,000 of liability and SUM/UM coverage. But to best evaluate your own personal situation, contact your insurance agent. You might be pleasantly surprised to discover that you can significantly raise your liability insurance limits without too much of a dent in your wallet. Doing so will better protect your assets and the well being of you and your family.