Uninsured and Underinsured Motorist Insurance: You Can't Leave Home Without It

By Howard D. Krepack, Esq.

You have probably heard the radio advertisements by a well-known auto insurance brokerage: you must have automobile insurance; the DMV will suspend your driver's license and refuse to register your car if you do not show proof of insurance; we will get you the best policy for the lowest cost.

Yes, California has a mandatory insurance law; what is formally called the "financial responsibility" law. But the fact is that financially irresponsible motorists remain on our streets and highways in large numbers and thus people injured by such motorists are at risk of being unable to recover damages for medical bills, lost wages, pain and suffering.

For many years, California has recognized the reality of uninsured AND underinsured motorists, even though the law says that everyone operating a car must have insurance. Therefore, along with a mandatory insurance law, there is a legal requirement that automobile insurance policies require uninsured motorist and underinsured motorist coverage, unless the insurer and insured execute a written waiver in a specific format laid out in the law.

"Uninsured motorist" coverage ("UM") refers to protection in the event that a negligent vehicle operator without any insurance at all causes injury to the person who owns that coverage. "Underinsured motorist" coverage ("UIM") provides the same type of protection in cases where a negligent person does not have enough of their own auto insurance coverage to pay for all of the damages sustained by the insured person who owns the UIM coverage.

The written waiver rule is very important and often misunderstood. The fact is that the law "presumes" that every motorist who has insurance will have UM and UIM coverage. If you go to your local insurance agent and ask for "full coverage" you will get UM and UIM coverage. If you ask for "bare bones" coverage, you will get only the coverage you need to protect you in case you are at fault in an accident while operating your insured motor vehicle. But you will also get UM and UIM coverage in a "bare bones" policy UNLESS you sign a form in plain language that says you are waiving UM and UIM coverage. If there is no waiver, the full and complete provisions of the UM and UIM law (over three pages of small type in the California statute books) are made a part of the insurance policy.

How much coverage do you get for UM and UIM? In California, you are usually entitled to the same coverage to protect you against UMs and UIMs as you have in case you are at fault. If you have $100,000 of liability coverage (your protection in case you are at fault in an accident), you can usually get $100,000 of UM and UIM coverage. But the absolute minimum for UM and UIM in California is $30,000 for each injured person and $60,000.00 for multiple injured people in the same accident. The only way that the law allows less than that is if you agree in writing; even then the UM and UIM limits cannot be less than $15,000 for each injured person and $30,000 per accident.

The two most important points for every consumer to know when it comes to UM and UIM coverage are that 1) insurance companies are prohibited by law from offering less coverage and less protection than is required by California's UM and UIM statute and 2) protection is extended to the "insured" person, not merely to whether or not one is an occupant of a particular type of motor vehicle.

This second point is the reason why UM and UIM coverage should never be waived and why many consumer advocates believe that UM and UIM policy limits should be as much as a person can afford. Simply stated, your UM and UIM coverage protects you while you are walking or riding a bicycle or motorcycle. UM and UIM coverage protects you against uninsured and underinsured motorists pretty much wherever you are and regardless of what you are doing in the event you are a victim of a UM's or UIM's negligent operation of a motor vehicle.

One of our appeal courts said it best in 2005: "[the UM and UIM law] mandates UM and UIM coverage to the named insured regardless of whether the individual is in a motor vehicle or on a horse, motorcycle, bicycle or stilts."

There are various exemptions in the law, but in the vast majority of everyday situations, if you have UM and UIM coverage, you will be protected against the irresponsible actions of an uninsured or underinsured motorist when you are driving your own car or even if you are victimized while a pedestrian or riding your bicycle.

If you have UM and UIM protection, you have also protected all of your family members living in your household, in the event they are similarly injured while a pedestrian or riding a bike. There is a limitation in the law as to relatives and friends you might be with at the time of such an accident. If you are accompanied by a friend or non-household relative, the UM and UIM coverage only applies if the accident happened while your friend was in, on, entering into or getting out of an insured motor vehicle.

As an example, assume you have UM coverage and you and your wife are struck by an uninsured motorist while riding your bikes together. You are both covered under the UM portion of your auto insurance. But if you are riding with your buddy and the same accident happens, only you can make a claim under your policy. Hopefully your buddy has his own UM coverage.

As you can see, UM and UIM coverage can be the most valuable part of your automobile insurance policy. Unfortunately, many insurance agents do not recognize this fact and often write coverage with inadequate limits for UM and UIM. In most cases, the increased limits for UM and UIM do not result in a significant premium increase. It is therefore very important for consumers to be aware of the importance of UM and UIM coverage and to take out a level of coverage they can afford that will provide meaningful benefits in the event of an accident involving an uninsured or underinsured motorist.

Finally, a word about UIM coverage. With UIM coverage, you are typically protecting yourself against the negligent driver who has chosen to take out only the California minimum of $15,000. UIM coverage only kicks in once you make a claim and obtain the negligent driver's $15,000 of coverage. If you have $30,000 of UIM coverage, and if the nature and extent of your injuries justifies it, your claim against your own carrier is for $15,000 (that is, you are entitled to the $15,000 from the "underinsured" driver and $15,000 from your own policy for a total of $30,000). As you can see, the wise choice is to have as much UM and UIM coverage as you can afford, so that you can recover fair compensation in the event you are injured at the hands of an uninsured or underinsured motorist.

A full discussion of all of the ins and outs of UM and UIM law is not possible in this short article (there are a number of exemptions, limitations and exclusions not covered here; for example your UM policy does not reimburse you for your damaged bike if you are hit by an uninsured motorist). Hopefully, you have learned from this article that meaningful, substantial UM and UIM coverage is important not only for motorists, but also for pedestrians and bicyclists, who are as exposed as anyone in society to the risks created on our streets and highways by uninsured and underinsured motorists.