Property & Casualty Insurance Procurement & Litigation (7 of 10 Reoccurring Themes Every Lawyer Should Know)
Understand Uninsured/Underinsured Motorist (UM) coverage before it is needed.
This coverage acts as the liability coverage for persons who injure you, your family, your employees or anyone driving your car with your permission when the person who causes injury either does not have liability insurance or is underinsured. Various states handle the issue of UM coverage differently, and apart from the 12 states that provide so-called ‘no-fault” coverage with Personal Injury Protection (PIP), insurance buyers seldom purchase adequate Automobile UM Liability Limits.
With this in mind, the minimum limit an automobile policy provides is typically woefully inadequate. It is estimated that 15 percent of all drivers on the road are without insurance and even more have minimum limits. In some states, this average percentage can be doubled.
There are very legitimate reasons that commercial entities do not increase their Uninsured/Underinsured limits. Many provide other insurance that would cover employees, such as workers’ compensation insurance and certain employee benefit coverages that would act as primary coverage before Uninsured/Underinsured coverage would come into play.
Lesson #7: Although this increased coverage will also increase the automobile liability premiums, the increase in coverage and premium should, at least, be considered.
ABOUT THE AUTHOR: David L. Stegall, Principal Consultant, Risk Consulting & Expert Services
David Stegall is the Principal Consultant at Risk Consulting & Expert Services. Mr. Stegall holds a B.A. in Communication from Auburn University and is a Chartered Property and Casualty Underwriter, an Associate in Risk Management and an Associate in Reinsurance, all awarded by The Institutes in Malvern, PA. He is also a Director of the Society of Risk Management Consultants.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.For specific technical or legal advice on the information provided and related topics, please contact the author.
