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Uninsured / Underinsured Motorists’ Coverage

What is UM/UIM Coverage: Uninsured motorists’ coverage applies in a situation where a collision occurred and the responsible party has no insurance coverage or the responsible party could not be identified, as the responsible party has fled the accident scene. Underinsured motorists’ coverage involves a situation where the responsible party has insurance coverage, but the insurance coverage of the responsible party is not sufficiently high to pay the losses which have been occasioned as a result of the collision.

A considerable number, nearly 15%, of drivers on the road in Pennsylvania, do not have liability insurance. For obvious reasons, these drivers are known as uninsured motorists (UM). Other drivers comply with the law, but will only carry the minimum liability coverage that is required by the state. This minimum coverage is often not enough to cover the medical bills or property damage costs that are incurred in an accident. Insurance companies refer to these drivers as underinsured motorists (UIM).

Uninsured/underinsured motorist bodily injury coverage includes the policyholder, other drivers covered by the policy, and any passengers in the vehicle at the time of the accident.

Like liability insurance, UM/UIM bodily injury coverage is purchased with limits. If the at-fault driver is an uninsured motorist, then the victim’s insurance policy will pay up to the per person/per accident limits purchased by the victim. If the at-fault driver is an underinsured motorist, then the underinsured’s policy will pay to its limit, and the victim’s policy will then pay the balance, up to the limit purchased. Like liability coverage, UM/UIM bodily injury insurance covers bodily injuries, lost wages, pain, and suffering.

Beginning January 1, 1990, “U” coverage is optional. This coverage will be offered on an “opt-out” system where the insured must make an affirmative rejection of the “U” coverage. The “U” coverage will be equal in limits to the bodily injury liability coverage under the policy unless the insured elects not to purchase “U” coverage or elects to purchase “U” coverage at a liability limit less than the liability coverage of the policy, or elects to purchase “U” coverage in excess of the liability coverage of the policy. We are suggesting to our clients that “U” coverage be maintained at least in an amount equal to the bodily injury liability coverage of the underlying policy.

Although, hypothetically, all motor vehicles in Pennsylvania are to have at least $15,000/$30,000 liability limits, the reality is that there are many uninsured drivers traveling the highways of Pennsylvania. If you are in a collision with an uninsured driver and you do not have “U” coverage, you would retain the right to sue the responsible driver, assuming you have not elected the limited tort option, but the chance of collecting from the uninsured driver is virtually nil. Even assuming the driver has the minimum coverage, the reality of the situation is that the $15,000/$30,000 policy is woefully inadequate to cover the various losses sustained in a substantial injury case. Maintaining adequate “U” coverage enables one to make a claim against their own carrier for monetary damages where the responsible party has no insurance or inadequate insurance.