31 Mar UM / UIM – Is This Issue Getting the Necessary Attention?
Obviously, our lives right now are anything but normal. The shelter-in-place ordinance is requiring (for good reason) a significant part of the population to work remotely. When our lives do get back to normalcy and we are commuting to work, going to various events, or taking a family vacation, there is a significant issue in which we should all be aware.
How many cars will you see on the road? Probably a fair amount. How would you feel if I advised you that based on a 2015 study (the last year where I could locate data), one out of every eight cars on the road are not insured? That’s correct, on a national level, one out of every eight are driving without coverage. Actually, there are a handful of states where that number is one in five. In total, this is equal to nearly 30 million uninsured people. This is certainly surprising since in virtually all states (with possibly one or two exceptions), drivers are required to maintain some type of auto insurance. I will concede that the numbers may be better today, but by how much is unknown.
As a result, there is a decent chance that you or one of your clients will be involved in an accident where the other driver does not have insurance. If the other party is in the wrong, bringing legal action against them to recover for injuries and damages is an option – but there may be a better way. This would involve using the uninsured motorist coverage from your own automobile policy.
In general, uninsured motorist (UM) insurance coverage will pay the medical bills (for the driver and passengers) if you are involved in an accident with an uninsured motorist who is at fault. UM insurance will reimburse for lost wages and also provide coverage if you are hit as a pedestrian by an uninsured driver, or are the victim of a hit-and-run accident. Underinsured motorist (UIM) protection applies when the at-fault driver has insufficient insurance to fully compensate the other party. It is generally defined as anyone who is at-fault and has bodily injury liability limits that are less the UIM limits of the party not at fault, and the limits are not enough to cover the losses of those injured.
Since there is significant potential that your agency could have a client that is involved in an accident with someone that either does not have insurance or does not have sufficient insurance, is your agency giving this coverage the proper level of attention?
Some suggested courses of action:
- Ensure the staff are educated on the topic. An official position should be taken and the appropriate procedures should be developed.
- Undertake an initiative to educate your clients and prospects on the value and purpose of UM / UIM coverage. This education could involve a newsletter, blog, or some type of social media platform. Consider using an actual claim to help make the point. When you are personally meeting with the client, ensure that this topic gets more than just a cursory overview and mention.
- See if your agency system can identify those clients who have UM / UIM limits less than their BI limits, and send them a letter encouraging them to consider increasing the UM / UIM limit.
- It is heavily suggested that the UM / UIM limits should be equal to the BI / PD limits. At a minimum, provide the client with limit options. When an agency does that, it forces the client to choose which option they want.
- In many states, there are rejection forms that need to be completed and signed by the insured if the client rejects the higher limits (this means all named insureds, not just the first named insured). You should ensure your agency is aware of the requirements in your state.
- If your carriers allow the umbrella to provide excess coverage over the underlying UM / UIM coverage limits and the client is carrying the proper underlying limits, be sure to advise the client of this option.
Be sure that your agency gives UM / UIM the attention it deserves.