Uninsured and Underinsured Motorist (often see as UM for short) coverage is probably one of the most misunderstood coverages and for good reason.
Uninsured and Underinsured Motorist is the coverage that pays for bodily and property damage. The difference Uninsured and Underinsured Motorist and Bodily Injury coverage is that Uninsured and Underinsured Motorist allows the individual to insure themselves against the low limits of other drivers. This coverage is mandatory under Georgia law, but only up to 25/50/25, the state minimum.
UM/UIM coverage can provide vital protection. It typically applies if you are hurt in an accident involving:
- A driver who has no insurance
- A driver who has insurance but there is not enough to compensate all of those who have been injured
- A hit-and-run driver where the at-fault driver cannot be identified
- A driver who hits you while you are walking or cycling.
This coverage provides options to the insured against an at-fault driver not having insurance, or not having enough insurance for their bodily injury. Which is why we find policies that lower this coverage for the sake of saving a few dollars on their premium a huge disservice to our clients.
This topic is so sensitive, that the Georgia state requires agents to keep a form on record showing the client accepting or declining the coverage, and to what extent. We can’t blame people for skipping on this coverage. It is difficult to explain, and often decent enough factor in their premiums to make a dent.
To make matters further complicated there are two options for Uninsured and Underinsured Motorist in Georgia. Take note that UM coverage only takes into account once the AT FAULT parties (if known) insurance or assets have been exhausted.
- Traditional: Non-stacking or reduced coverage. This form of UM coverage will pay UP TO the limit noted, after taking into account prior settlement monies.
- Example: Our client has 100/300 UM coverage. The at-fault party has 25/50.
- Our client has 150,000 in damages. The at-fault party pays its 25k, leaving 125,000 unpaid. The UM coverage in this example will pay 75k to a reduced amount of 100,000.
- Added on: Stacking or Excess coverage. This form of UM coverage will STACK/Add on or pay in Excess of the other parties coverage.
- Example: our client has 100/300 UM coverage added on. The at-fault party has 25/50.
- Our client has 150,00 in damages. The at-fault party pays their 25k, leaving 125,000 unpaid. The UM coverage in this example will pay 100k to the add on the amount of 125,000.00
Since the settlements can vary greatly, it is vital that clients understand the difference between the two, and have the coverages known and signed for. For many people, the last thing they want to hear is that they passed on something that could have drastically altered their life.
This coverage can NOT exceed the Bodily Injury limit. Which means you can not insure yourself for a limit greater than you insure other parties. Yet people can most certainly insure themselves for LESS, which is far more common than one would like to believe. Again, we can not blame our consumers, given that the common message that suggests insurance is a commodity that would be valued based on price alone.
At The Weikum Group, we always quote with matching limits. Whether we establish an insurance profile at 50/100 or 250/500, we match UM limits with BI limits. Should the client elect to insure themselves at a lower coverage limit to save money, we can do so but do it kicking and screaming (and paperwork signing off on).
We love our community, and the best we way can make sure everyone is better off is by placing the right client with the right company.
