Ok, I’ve been struggling with this ever since Christian at the nameless blog introduced to my head that uninsured/underinsured motorist coverage might not be a good idea. I had it at $250k/$500k/$10k mostly because I thought it was required to maintain my umbrella insurance. It turns out this is partially true. If I keep it like this, I also get $1M coverage for myself and my family under the umbrella policy. However, I can drop that part and still have the $1M liability coverage against being sued by others. And that’s my main worry, being sued by another driver.
There seems to be two schools of thought on uninsured coverage: Either drop it completely, or buy as much as you can afford.
Drop It Completely, It’s a scam
This line of thinking states that you don’t need this if you get into an accident with an uninsured driver, because
a) Your health insurance will cover your medical bills.
b) Your collision insurance will cover your car damages, although you have to pay your deductible. With uninsured coverage, no deductible.
After confirming with my agent, it’s true that if get in an accident with an uninsured motorist and I don’t have uninsured coverage, I’ll just have to pay my $1,000 deductible. I’m ok with that.
There are a couple problems with this theory that I can see. First, you need good health insurance that covers you in a car accident. Some actually specifically exclude car crashes where it is someone else’s fault. Also, many people these days have a very high annual deductible, or even just have to pay 20% flat of all medical bills. And what about lost pay and also future wages? That can get pricey.
Buy as much as you can afford
This theory basically focuses on the idea that this is where you are buying insurance for yourself and your family, versus liability coverage for others. Now, if you get hurt in an uninsured accident, you don’t have to depend on the guy with no or even the legal minimum $15k of coverage. You have your own $100k, $250k, or even $1M of coverage. No need to get your health insurance involved and pay and deductibles. Of course, this means you will be asking your own insurance company for money, and will probably want a lawyer on your side. You want to get everything you can, lost wages, future wages,”pain ansuffering” damages, etc.
I’m somewhat in the middle… I guess it’s all about how much you’re paying and that risk/reward balance… What do y’all think?
By Jonathan Ping | Insurance | 6/2/05, 7:56am