That letter from your car insurance company about Uninsured Motorist Coverage got you scratching you head while you try to translate all that insurance mum boo jumbo. Well, lets see if we can simplify it some, or at least get the language into English.
Uninsured motorists coverage (UM) is an important coverage providing protection for you, your family and your passengers while in your car. It applies when you are in a wreck and the other driver is at fault, and more importantly is legally responsible for your injuries or property damage. But just your luck that driver does not have car insurance. Uninsured coverage means just that, you have coverage from your policy, for those damages caused by the guy without insurance. Your policy will pay the medical claim up to whatever limits you have chosen for bodily injury for you and your passengers and for property damage to your car.
So, what else will uninsured motorists coverage do for you, well what if the guy who hits you has car insurance but not enough to cover your doctor bills from the accident? This is commonly called underinsured coverage, and it is what has the car insurance companies sending out the letters.
Reasons for the change
In 2008, Georgia adopted a law requiring auto insurers to provide revised uninsured motorists coverage unless you reject this coverage in writing. The new uninsured motorists coverage provides additional protection for car owners, starting in 2009.
So let’s explain how the current UM works, then we will go to how the new coverage will work.
If the guy who hit you has let’s say $25,000 for bodily injury, and your UM limits on your policy is $50,000, but your medical bills from the accident equal $100,000. So the first thing that is going to happen is other insurance company will pay the $25,000 the max of their policy. That leaves you with a $75,000 bill to pay; your company is going to subtract from your UM policy limits what the other company has already paid.
Remember, your UM coverage is $50,000, so that amount minus the $25,000 the other company paid leaves you with $25,000 worth of UM coverage. That $25,000 subtracted from the $75,000 leaves you with a $50,000 medical bill to pay.
As a side note I never recommend the state minimum limits nor do I recommend caring only the minimum for UM protection. You are more likely to be hit by someone with car insurance, and they not have enough coverage to pay your medical bills, than being hit by someone without any insurance.
New option for 2008
Now the new option for 2008 is you get the amount of your UM coverage in addition to the limits the at fault guy’s insurance will pay, up to the amount of the doctor bills. Same accident, but now you have the new UM coverage, because you want the additional protection. On the $75,000 bill your policy pays the full $50,000 UM limits, and that now leaves you with a $25,000 bill to pay.
What will the higher limits cost, well you guessed it more coverage means more premium, and you will have to determine what is best for your situation. The higher premium won’t break the bank, but everyone has a budget they have to live within and only you can weigh the cost verse the benefit of the higher protection.
What you need to do
You will need to select one of the following coverage options:
1. You may purchase the Traditional Uninsured Motorists Coverage, which is comparable to your current coverage, and reject the new Uninsured Motorists Coverage.
2. You may purchase the new Uninsured Motorists Coverage that provides additional protection, but at a higher cost.
3. You may reject Uninsured Motorists Coverage entirely, which I don’t recommend even on vehicles that you only have liability coverage on.
Still scratching your head? Give me a call 754-1226 and I’ll try to clear things up, sometimes it takes going over something more than once to finally get your mind around the thing.
Mark Czachowski is a financial representative with the Czachowski Insurance Agency in Springfield.