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Uninsured Motorist Coverage

This may be the most important coverage you have on your car insurance policy.  The effect of underinsured or uninsured motorist coverage (UM coverage) is to make sure you are covered if you are in a wreck that is not your fault, no matter if the person that caused the wreck has limited or no liability insurance.  Each state has differing rules, so when I talk about UM coverage I am referring to Georgia law.  However, the basic framework is similar in most states.

The typical scenario is this, you are involved in a car wreck with a person that has minimum liability coverage of $25,000.00 and no personal assets.  Your injuries are significant and the medical expenses that you have incurred exceed $25,000.00 and your claim is worth $100,000.00.  If you do not have uninsured motorist coverage, practically speaking, the most you will be able to be paid back for your injuries is the $25,000.00 from the liability coverage.  This of course is not enough, but if you do not have UM coverage then that is all you will get.  If you do have UM coverage, you can use that coverage to make up the difference between what your claim is worth and the deficiency in liability coverage.  So, for example, if you have $100,000.00 of UM coverage, your insurance company would pay an additional $100,000.00 for your injuries on top of the $25,000.00 liability coverage from the at-fault driver.

In Georgia, insurance companies give you an option to have no UM coverage, “non-stackable” UM coverage and “add on” UM coverage.  When making a choice between these options, always choose “add on” coverage.  It will be the most expensive item (although the price difference is usually less than $100 a year), but it is worth it.  The difference between “add on” coverage and “non-stackable” coverage is with “add on” coverage if you have $100,000.00 worth of UM coverage that is what you will get from your insurance company no matter how much liability coverage the at fault driver has.  So, for example, if the at fault driver has $25,000.00 worth of liability coverage and you have $100,000.00 worth of UM coverage you would be eligible for $125,000.00 worth of total insurance coverage.  On the other hand, if you have “non-stackable” UM coverage of $100,000.00 your insurance company would get an offset for the amount of liability coverage available.  So, in our example, if the at fault driver has $25,000.00 liability coverage your UM carrier would only have to be responsible for $75,000.00 worth of coverage, for a total of $100,000.00 worth of insurance coverage.  $25,000.00 from the at-fault driver and $75,000.00 from your UM carrier.

All this can get a little confusing, so just remember, you want to have “add on” UM coverage and it should match the amount of liability coverage you have.

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Posted in: Automobile Wrecks