Between 10% and 15% of all motorists on the road today are underinsured or uninsured. For drivers that carry simple liability coverage as the law demands, their insurance will only pay for bodily injury or property damage to others, when the policyholder is at fault. In the event of an accident where the other motorist is at fault and has insufficient or no insurance coverage, you could be left on the hook for some or all of you and your passenger’s losses.
Increasing your coverage might sound unappealing, but you need to understand that a minor increase in your insurance limits could help you avoid a financial disaster in the future. Let’s take a look at why bodily injury (BI) and property damage (PD) liability coverage might not be enough to give you real peace of mind, and how you can improve the protection your auto insurance provides.
How Car Insurance Works
It varies from state to state, but there is basic, bare-bones coverage you must have to legally drive on the road, this coverage is called Bodily Injury and Property Damage. This coverage is expressed in numeric values, like 25/50/10, or 100/300/50, with the first number being the amount the insurance will pay out (in thousands) to each person in the other car when you are found to be at fault for an accident. The second number is the total amount the insurance company will pay in the aggregate to all passengers for an accident. The last number is the amount your insurance would pay to repair or replace the other driver’s vehicle. These limits are called “Split Limits.” Some companies also offer Combined Single Limits or CSL. Combined Single Limits are expressed with just one number, such as 300 CSL or 500 CSL. With this type of limit, the single number represents the limit your insurance company would pay for a single person’s loss, as well as the total amount they would pay in aggregate for an accident, including property damage.
Now let’s look at all of that in reverse. What if you were not at fault? Now you and your passengers are covered by the Bodily Injury and Property Damage coverage from the other driver’s policy that was at fault. What if the other driver only had minimum limits? As you can probably guess, there won’t be enough money there to cover all of the losses. That is where Uninsured Motorist (UI,) Underinsured Motorist (UIM,) and Uninsured Motorist Property Damage (UMDP) comes in.
Think of UI, UM, and UMPD as the reverse of your BI/PD. It is there to pay you, when another driver is at fault and does not have coverage, or doesn’t have high enough limits. Without UI/UIM, you would only have as much coverage as the other driver carries. With UI/UIM, your limits would be as high as you chose to purchase when you bought your car insurance. By increasing underinsured (UI), uninsured motorist (UIM), and uninsured motorist property damage (UMPD) coverage to your plan, you will be financially protected in the event of a car accident where the other driver is at fault.
Insurance in the “New Normal”
Because many states are still in some form of shutdown due to the COVID-19 pandemic, many insurance companies are offering incentives to drivers who are still out on the road. These include reduced costs or refunds on premiums because there are simply fewer people driving, reducing the number of accidents.
Due to the financial hardship imposed by the lockdown, insurance companies have also allowed for deferred payments or payment plans for insurance premiums. When the bill comes due, however, premiums must be paid. In the event of an accident, should the driver not be in good standing with their insurance, there may be no coverage. This means there are probably far more people on the road who are uninsured or underinsured, making the risk of each accident far greater.
Right now would be a perfect time to discuss adding UI, UIM, and UMPD coverage. Before you pack up your family and head out to enjoy a beautiful Wisconsin summer, consider contacting Strobel Insurance in Eau Claire. Speaking directly with an agent about insurance will provide real-time answers to your questions, and help you evaluate what your insurance needs are. With over 30 years of individual insurance experience, Dave Strobel and his staff can give you peace of mind, no matter what the road throws at you.
