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How Much Uninsured Motorist Coverage Do You Need?





Notice we didn’t ask if you need uninsured motorist coverage? You do. Doubt us? Consider these startling stats:

  •  The Insurance Research Council (IRC) estimates that  in 2010, on average, 1 out of every 6 U.S. drivers do not have any automobile insurance coverage – that’s about 33 million drivers based on figures compiled by the Federal Highway Administration
  •  Broken out by state, New Mexico has the highest number (29%) of uninsured drivers. 
  •  Rounding out the top 5 uninsured driver states are Mississippi (28%), Alabama (26%), Oklahoma (24%), and Florida (23%). Check your state’s average here. <link to the State Auto Basics website section or delete this sentence> 
  • Some research suggests the prime offenders tend to be men under 30 who rent, have lower than average incomes and move around  a lot
  • Bottom-line: the odds of you being hit by one of these scofflaws are darned good and you’ll have a hard time recovering any compensation from them

 

While most states require insurance companies that sell auto insurance to offer uninsured/underinsured motorist coverage (UI/UIM), only 20 state currently mandate it and in 28 states you can opt-out of it by signing a waiver. Given the economic impact of dealing with the consequences of uninsured drivers, you’d think cash-strapped states would step up the requirements. Some states are addressing the issue by putting in place electronic insurance verification programs that allow their DMVs to match registration to coverage information provided by auto insurers. If your records don’t jibe, your registration (and sometimes your driver’s license) is automatically suspended and you can’t get it back without providing proof of insurance and paying a reinstatement fee. But with the lingering recession, a lot of people are willing to risk doing without car insurance until they absolutely have no other choice.  And the verification process is pretty useless in addressing the uninsured motorist problem created by the  rising number of undocumented illegal aliens driving around out there. And then you have the folks who are willing to risk prosecution, heavy fines and possible jail time by forging their proof of insurance cards. 

 

But you’re one of the prudent people who wants to protect your assets and your family by carrying UI/UIM coverage even when your state doesn’t require it. So, back to the original question: how much uninsured/underinsured motorist coverage do you need? In states where the coverage is mandated, the bare minimum requirement is typically equal to the minimum liability insurance requirement. For example, $30,000 per person/$60,000 aggregate bodily injury (this varies by state). Where it isn’t required, insurance companies will usually let you buy UI/UIM in amount equal to your bodily injury liability. If you are allowed to increase the UI/UIM in amounts independent of that, you’d be wise to double-up or even triple-up your coverage, given the rising cost of medical care.  Otherwise, think long and hard about upping your coverage limits across the board. After all, it would be pretty hard to track down the uninsured driver who hit when you’re lying in a hospital worry about taking out a second mortgage to cover the bill. 

 

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