What Is UM/UIM Coverage and Why Is It Important?
By: Kevin Stouwie
Board Certified, Personal Injury Trial Law
Texas Board of Legal Specialization
Texas law requires all vehicles to be insured, at least at a very basic level of automobile liability insurance coverage . These laws are commonly referred to as “Financial Responsibility” laws. In theory, if these laws were followed by all Texas drivers, there would be a basic level of insurance available for nearly every single accident that happens in the state, notwithstanding the questionable practice of insurance companies excluding and drastically limiting what persons may actually be covered under an insurance policy insuring a particular automobile.
Besides the constant push and propaganda campaigns to degrade and minimize the consequences suffered by injured victims of car accidents, we have seen a big increase in recent years of the disturbing practices within the insurance industry that seek to strip liability coverage down to just a “named insured” on a policy. Some of the companies that like to brag in their advertisements about how much money they save their customers are the most guilty of “stripping” the policies. This undermines the public purpose and the scope of liability coverage, and, as we will see later in this article, the practice of “stripping” policies makes the value of uninsured/underinsured coverage more relevant now than ever before.
In my experience as a personal injury trial lawyer, which includes representing hundreds of injured accident victims over the years, I have come to firmly believe that we all would be much better off if everyone obeyed the law and carried at least the basic required amount of liability insurance. However, I have personally seen countless examples of people who have blatantly ignored the legal requirement to carry automobile insurance and then injured or killed someone in an accident. Furthermore, basic insurance requirements are just that; basic. Texas law does NOT require a person to carry high levels of insurance coverage, or coverage that insures against other people’s negligence. That is where the concept of uninsured/underinsured, or UM/UIM for short, becomes an extremely important consideration for everyone who purchases automobile insurance in Texas.
The basic insurance required under Texas law is intended to be adequate to pay for the expenses and damages you would cause in a typical accident. Minimum bodily injury coverage in our state provides up to $25,000 per injured person, with a $50,000 total available if there are multiple injured parties, regardless of how many people are injured in the same incident. The shorthand we use to refer to this coverage is 25/50. There is also an additional $25,000 in coverage for property damage to other people’s vehicles. The minimum level of coverage will automatically increase in 2011 to 30/60/30 ($30,000 per person, $60,000 total, and $30,000 for property damage).
As previously stated, at least in theory, every driver on Texas roads and highways is covered by liability insurance to protect the other drivers around them from negligent acts. In reality, many people simply ignore the law and drive without insurance, or they hit and run, which makes it nearly impossible to make a claim against their insurance company. I would estimate that between 20 and 35 percent of all San Antonio area drivers do not obey the financial responsibility laws and carry the state mandated limit of car insurance. Even where there is coverage, if the negligent, or “at fault” party only has the minimum coverage required by law, we see quite often that the basic insurance is not enough to compensate the injured party for all of their damages and losses. This is where uninsured coverage and underinsured coverage, UM/UIM, become extremely important.
An uninsured driver is someone who either has no insurance or who hits and runs (and gets away with it). An underinsured driver is one who does have liability insurance, but in an amount that is not enough to cover the total damages in a particular situation. For example, a negligent driver who ran a red light and struck your car might have a 25/50/25 (minimum limits) policy, but that driver might have caused $80,000 in damages to you individually. If you have sufficient underinsured coverage, it would be used to pay the $55,000 difference.
You have the legal right, under Texas law, to buy insurance coverage to protect yourself against both uninsured and underinsured motorists. This coverage is generally much less expensive than the basic liability coverage required by law. Although UM/UIM coverage is optional, your insurance company must offer you the opportunity to purchase it, and your refusal to purchase it must be in writing. This coverage protects you, your family members, passengers in your vehicle, and anybody driving your vehicle with your permission for all of the consequences of your accident. It pays your medical and funeral expenses, car repairs, car rental charges, the replacement of damaged contents, lost wages, pain and suffering, mental anguish, disfigurement, and permanent or partial disability, up to the dollar limits that you have purchased.
You can buy uninsured/ underinsured motorist coverage in the minimum amount or in a larger amount, but only up to the dollar limits of your liability policy. In other words, you cannot insure yourself for a higher amount of damages caused by uninsured and underinsured motorists than the amount you carry for the damages you might cause. It is usually quite inexpensive, but can be critically important and valuable to you when/if you ever need it.
If you are not sure what choice you made when you were offered the opportunity to buy UM/UIM coverage, talk to your insurance agent as soon as possible. It is also prudent to periodically review your personal situation in life and update the coverage on your automobile insurance policy accordingly.
Recall that your liability coverage protects you from having to pay damages to someone if you cause an accident. Your liability policy will not pay for the potentially devastating consequences arising from an accident with an uninsured or underinsured motorist. Uninsured motorists very often have little or no money, few assets, and no real prospects for having any money or means to pay you in the future. Therefore, an accident with such a person could cause you to face significant financial hardship if you do not have UM/UIM coverage and you suffer a serious injury caused by such a driver.
As mentioned earlier herein, even when another driver does carry a valid auto liability policy, it may be a minimum limit ($25,000) policy. This minimal coverage has the potential to be quickly exhausted. Medical care is usually quite expensive, and many accidents cause severe injuries and death.. Further, the cost to replace some vehicles can easily exceed $30,000. If more than one vehicle is damaged by the at fault party, the $30,000 is even more at risk of being inadequate to cover the property damage costs.
One of the least pleasant things I have had to do as a board certified trial attorney is tell the family of a loved one that has been killed or seriously injured that there is either, no insurance coverage to pay any money for the negligent driver’s actions, or that there is only a very small amount of money available. Unfortunately, it is a somewhat common situation. If more people had to see the effect of this scenario, everyone would carry higher limits of both liability coverage, and UM/UIM.
If money is too scarce to purchase a proper level of coverage, it is my firm belief that everyone should purchase at least the minimum amount of UM/UIM, to go along with their liability insurance. If possible, have as much uninsured and underinsured coverage as you have liability coverage. This may well turn out to be your only protection against uninsured and underinsured motorists.
This article is for informational purposes only. It is not intended to provide legal advice, as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.