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Insurance Corner: Why carry uninsured motorist coverage?

I do not watch a lot of television, but recently I saw one legal program that encouraged drivers to purchase uninsured motorist coverage for their autos and an advertisement from an attorney that did the same. What is uninsured motorist coverage and why would an attorney think you should have it in a state where insurance is mandatory?

The first answer is that despite being a mandatory insurance state, many drivers have let their insurance lapse after the first payment and drive without insurance. Law enforcement has too many other more important things to do than to track down offenders. It is a resource problem. That being said, why buy uninsured motorist coverage? It is not required.

First, you buy it to protect you and the occupants of your vehicle in case you are hit by someone who is uninsured. If you do not have this coverage for Uninsured Motorist Bodily Injury and Property Damage, your only recourse is to collect under your medical payments coverage for any injuries, or collision coverage for the damage to your vehicle.

The other option is to sue the uninsured party, but if they do not have insurance, chances are they do not have assets to collect against. That would be a costly and long drawn out process. You might even have a tough time getting a lawyer to take your case since their fee is based off of the final settlement amount in most cases. That is why an attorney would encourage you to buy the coverage.

The other part of uninsured motorist coverage is underinsured motorist coverage. Mandatory minimum bodily injury limits in Georgia are $25,000/$50,000. If you do not have other assets to protect, you select this limit of coverage since is the most affordable, just to be able to drive. But what happens if you are hit in a serious accident by someone with these minimum limits and the medical bills for you and your passengers far exceed $25,000 per person and $50,000 in total? They are insured, so uninsured motorist coverage does not apply. Underinsured motorist coverage does apply if you selected a limit of coverage more than $25,000/$50,000, or you selected $25,000/$50,000 add on coverage.

Here is an example. If the person at fault in an accident has the minimum limit of bodily injury coverage and you have purchased the minimum limit of underinsured motorist coverage, those limits match. If you chose traditional underinsured motorist coverage, there is no coverage over the other party’s bodily injury coverage. If you chose add-on coverage, you would have another $25,000/$50,000 to collect from over the other party’s coverage.

In the same scenario, if you have $100,000/$300,000 uninsured/underinsured motorist coverage, after the other party’s insurance company pays their limit, you would still have $75,000/$250,000 if you chose traditional uninsured motorist coverage and $100,000/$300,000 if you chose add-on coverage.

What coverage you buy should be based on what you can afford and the assets you have. You want to make sure you are fully protected in the event of an accident. Like most liability coverage, uninsured/underinsured motorist coverage is reasonably affordable depending on your driving record and accident history. The choice of coverage is always up to you, but be informed and ask your insurance agent or insurance company which is the best coverage for you.

Dave Pushman is the former regional vice president of Geico in Macon and is now an independent insurance agent with Tidwell and Hilburn Insurance. He can be reached at davep@th-ins.com.

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