Uninsured Motorists: Why Am I Paying for Their Insurance?

By Ryan Hurlbert on December 19th, 2009
Auto Insurance

"The law says you need to carry car insurance to drive a car, right? So what is this Uninsured Motorist Bodily Injury protection for? Why do I have to pay to cover law-breakers?"

These are common questions asked by shoppers of auto insurance. However, they stem from a common misconception about uninsured motorist coverage. The fact is that uninsured motorist coverage is to protect you, not them.

Despite laws in 47 states requiring auto liability insurance, many drivers don't bother. They either can't afford it, can't qualify for it, or simply don't believe they should be forced to carry it. You need to protect yourself from these drivers, and that is where Uninsured/Underinsured Motorist Bodily Injury (UMBI) protection comes in.

What Does UMBI Cover?

Uninsured/Underinsured Motorist Bodily Injury (UMBI) coverage protects you when:

  • You are in an accident and the at-fault driver has no liability insurance. He is uninsured. Your company will pay your claim and then go after the other party to recover.
  • You are in an accident and the at-fault driver carries liability insurance, but he carries a lower limit of liability than you do, and your claim exceeds his coverage limit. He is under-insured. Your company would pay your claim up to the limits of your own policy, then try and recover from the other party.

UMBI vs. Health Insurance

"But I have health insurance that will pay my doctor bills. Why do I need UMBI, too?"

Bodily injury coverage is not limited to the actual medical cost. Bodily Injury coverage relates to all costs associated with an injury received as a result of an accident. Sure, your health insurance may pay your medical bills (after co-pays and deductibles, of course), but it won't cover your lost wages during recovery, transportation to medical appointments when you can't drive yourself, or domestic help to cook and clean when you are incapacitated. It won't cover your spouse's lost wages while they tend to you, the grab bars you need in the shower, or the wheel chair ramp up to your front door. And if you are partially disabled and can no longer do the work you are accustomed to, health insurance will not compensate you for your reduced earnings capacity. UMBI pays for all of those things along with the doctor's bills.

Underinsured Motorists

The Underinsured Motorist part of UMBI helps close the gap between your actual damages and the limits of the at-fault driver's policy. Liability limits define the maximum amount an insurer will pay for any claim, and the state minimum requirements in virtually every state are embarrassingly low, with most states requiring only $25,000 or less per person in liability coverage.

Say you are in a collision and your damages total $65,000, but the at-fault driver carries only $25,000 in liability coverage. Your UMBI could cover the $40,000 difference. There is a catch: your insurer will only pay the difference up to your UMBI limit, so if you yourself only carry $25,000, your insurer will pay nothing. That makes a pretty compelling argument to increase your limit.

Insurance regulations won't allow you to carry UMBI limits that are higher than your bodily injury liability limits, so you may want to consider raising your liability limits to gain access to greater UMBI protection. Liability limits and Uninsured/Underinsured Motorist Bodily Injury protection are complicated and should be discussed with your insurance agent to make sure you are getting the right level of coverage.

Talk to Your Agent

Have this discussion with your auto insurance agent sooner than later. You can get in touch with an agent and receive an auto insurance quote by filling out a secure online form. Ask about the effect of UMBI coverage on your car insurance rates.

Economic hard times mean more people have cut their insurance limits or eliminated insurance altogether. It's up to you to protect yourself from financial disaster because of an auto accident.

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