Mar 25

Uninsured/Underinsured Motorist Coverage and Why It Matters

What Is Uninsured/Underinsured Motorist Coverage?

Uninsured/Underinsured Motorist Coverage (“UM Coverage”) is optional coverage you may purchase as part of your car insurance. UM Coverage will pay your medical expenses, lost wages and damages for pain and suffering if you are injured by an uninsured driver’s negligent driving.

Depending on the type and amount of UM Coverage you select, UM Coverage pays any medical expenses, lost wages and damages for pain and suffering if your damages exceed the negligent driver’s insurance coverage.

Why Do I Need It?

Georgia law requires every driver to carry liability insurance coverage in the minimum amount of $25,000 if they negligently injure one person, and $50,000 if they negligently injure two or more people.  Medical care is expensive. It is not unusual for our firm to deal with cases where the medical expenses alone far exceed the minimum required $25,000 coverage.

There are many people driving in Waycross and Ware County who do not comply with the law and drive without insurance.  In 2012, 122 drivers were charged with driving with no insurance in the State Court of Ware County. Another 112 were charged in Waycross Municipal Court.

Added-On or Reduced Coverage?

There are two types of UM Coverage:  Added-On and Reduced (sometimes referred to as Traditional).  Added-On coverage provides coverage for your damages in addition to the amount paid by the negligent driver’s insurance.  Reduced coverage allows your insurer to deduct any amount paid by the negligent driver’s insurer before paying any of your damages.

To illustrate the difference between Added-On and Reduced UM Coverage, look at the following examples.  For this example, assume that you were involved in a wreck and that your damages were as follows:

Cost of Your Medical Care                      $50,000
Your Lost Wages Due to Being Unable to Work     25,000
Your Total Loss (Excluding Pain and Suffering) $75,000

Now, assume that the negligent driver who caused the accident has the minimum amount of coverage required by law ($25,000) and that you purchased $25,000 in UM Coverage.  The first example shows how things would work out if you purchased Added-On UM Coverage.  The second example shows how things would work out if you purchased Reduced UM Coverage.

Added-On UM Coverage Example

Your Total Loss (Excluding Pain and Suffering)  $75,000
Negligent Driver’s Insurer Pays                  25,000
If You Have $25,000 in Added-On UM Coverage 
Your UM Carrier Pays                             25,000
You Lose                                        $25,000

Reduced UM Coverage Example

Your Total Loss (Excluding Pain and Suffering)  $75,000
Negligent Driver’s Insurer Pays                  25,000
If You Have $25,000 in Reduced UM Coverage
Your UM Carrier Takes the Credit for the Negligent 
Driver’s Liability Payment and Pays Nothing.        -0-
You Lose                                        $50,000

If you purchase $50,000 in UM coverage it works out as follows:

Added-On UM Coverage Example

Your Total Loss (Excluding Pain and Suffering)  $75,000
Minimally Insured Driver’s Insurer Pays          25,000
If You Have $50,000 in Added-On UM Coverage 
Your UM Carrier Pays                             50,000
You Lose                                            -0-

Reduced UM Coverage Example

Your Total Loss (Excluding Pain and Suffering)  $75,000
Minimally Insured Driver’s Insurer Pays          25,000
If You Have $50,000 in Reduced UM Coverage
Your UM Carrier Takes the Credit for the
Negligent Driver’s Liability Payment and Pays    25,000
You Lose                                        $25,000

As you can see, Added-On UM Coverage provides more protection than Reduced UM Coverage.  For this reason, we recommend that you purchase at least $100,000 in Added-On UM coverage to protect yourself and your family.

Is UM Coverage Expensive?

Georgia Farm Bureau sells UM Coverage for $65 every six months for $100,000 in Added-On UM coverage.  State Farm prices UM Coverage based on a number of factors.  State Farm may charge from $25 – $75 for UM coverage every six months.  (Quotes were obtained in July of 2013.)

Will It Raise My Insurance Rates If I Make A Claim?

Georgia law provides that if you make a claim arising out of a wreck that was not your fault, your carrier cannot raise your rates.