Underinsured Motorist Coverage - Why You Need It

Car owners are required to carry automobile liability insurance in order to drive on Texas roads. Liability insurance will pay for another person's expenses if you are at fault in an accident.

However, despite Texas law, some drivers operate their car without having liability insurance coverage. Drivers can protect their loved ones and themselves from financially irresponsible drivers who fail to follow Texas law by purchasing underinsured/uninsured motorist insurance coverage.

There are two common scenarios where your uninsured motorist coverage is worth every single penny.

1) You were hit by a driver who didn’t have ANY insurance:

This is where uninsured motorist coverage will save you from paying large medical deductibles and sacrificing your income while you recover, among other things. Even though there’s not a law that specifically states that you need uninsured motorist coverage, you risk your well-being by driving on Texas roads without uninsured motorist coverage.

2) You were hit by a driver who didn’t have ENOUGH insurance:

Insurance policies have limits on the amount of coverage they extend to insured drivers and other drivers involved in a collision. As you’d expect, the higher the coverage, the higher the price. And that’s often the reason 14% of the drivers you share Texas roads with don’t have insurance in the first place, let alone enough insurance to cover a catastrophic injury caused by his or her negligent driving.

The fact is, a good number of drivers out there on the road will obtain the minimum insurance required by law. In Texas, that means just $30,000 in coverage per person and $60,000 per accident.

In other words, if you get into a 4-car pile-up that was caused by a driver with the minimum coverage required by Texas, things could get messy.

Say you and the two other drivers suffer injuries that all require inpatient surgery. The combined bill is almost certain to exceed $60,000. If all three drivers were driving without underinsured motorist coverage, there isn’t enough money to cover the medical expenses.

The point is, even if a driver does carry the minimum coverage required by law, if a car or motorcycle accident is severe enough, it may not be enough to cover your damages if the driver is at fault. That’s why you need uninsured motorist coverage AND underinsured motorist coverage.

Types of Insurance Coverage

In order to understand where uninsured and underinsured motorist coverage fit into the mix of policies, it’s important to understand the basics. There are several types of insurance that you can purchase to cover your car or motorcycle. Each kind covers a different kind of damage. The major categories are listed below, but you may be able to purchase other types from your insurance carriers, such as towing and labor or rental reimbursement.

• Liability Insurance: This is the one mentioned earlier on in this article. You are required to carry liability insurance by state law. Liability insurance pays to repair or replace the other driver's vehicle if you are responsible for the car or motorcycle accident.  It also pays medical expenses incurred by other people injured in the crash. As mentioned before, the minimum liability limits in the State of Texas are $30,000 for each injured person, covering up to a total of $60,000 per accident, and $25,000 for property damage per accident. You can (and should - especially if you are not able to self-insure) purchase more coverage. But that is ultimately your decision.
• Collision Coverage: Collision coverage insurance pays for the repair of physical damage to your car or motorcycle in the event of a car accident. Collision coverage will also pay to replace your car if the insurance company determines your car is totaled (unsafe or impossible to drive). Keep in mind that collision coverage will only cover the current value of your car. Don’t expect to get a check for what you paid for your car (even if it’s only a year old) if it is totaled.
• Comprehensive Coverage:  Comprehensive vehicle coverage covers the cost of replacing or repairing your car or motorcycle if it is damaged in some way other than an accident. Some of the most common situations where comprehensive coverage is handy are in the event of vehicle theft, floods, and - especially in Texas - softball-sized hail (or any other size, for that matter).
• Medical Payment Coverage: This type of insurance covers medical and funeral bills resulting from a car or motorcycle accident for you or your passengers. It’s the last insurance you ever want to use, but it’s necessary to protect you and your family from facing financial ruin after an unavoidable collision.
• Uninsured/Underinsured Motorist Coverage(s) (UM/UIM):  And finally - the topic of this article - comes uninsured motorist and underinsured motorist coverages (UM/UIM). As mentioned previously, UM and UIM pay your various expenses that result from an accident caused by an uninsured or underinsured driver - or by a hit and run driver.  Bodily injury UM/UIM covers medical bills, lost wages and other damages that you sustain in the accident. Property damage UM/UIM pays for damages to your car, items in your car, and may cover a rental car while your car or motorcycle is being fixed.

When does Underinsured Motorist Coverage Apply?

Underinsured motorist coverage generally applies when the damages caused by the other driver exceeds the amount of insurance they carry.  According to the Center for Disease Control, on average, a car crash-related emergency visit costs about $3,300, and hospitalization costs about $57,000 over a person's lifetime.  It is easy to see how, if the driver at fault for a car or motorcycle accident carries only the Texas minimum of $30,000 per person, an injured driver could easily find him or herself with uncovered damages.  UI/UIM steps up to cover the remaining damages caused by the other driver's negligence once that driver's insurance policy is exhausted.

In addition to covering an underinsured driver in a car or motorcycle accident, UI/UIM may also apply in some situations you may not consider at first thought.  For example, uninsured and underinsured motorist coverage can apply if you are in a hit and run accident. Worst case scenario, the driver who fled the scene is treated as if he or she was not covered and your UI/UIM insurance will go into effect.

Depending on your policy, uninsured motorist coverage could also cover an accident where you aren’t even in a car. Some policies cover you as a pedestrian or bicyclist when you’re hit by an underinsured or completely uninsured driver.  It may also cover you if you are a passenger in a car hit by an underinsured driver; in this case, you may have claims against the UI/UIM policies of the driver of the vehicle you are a passenger in and your own policy. Because UI/UIM claims can be (and often are) very complicated, and insurance companies aren’t going to just fork over money without a fight, it is best to contact an attorney experienced in UI/UIM claims to assist you.

The most common questions we get about uninsured and underinsured motorist coverage:

How Does Underinsured Insurance Coverage Work?

It is important to understand that UI/UIM insurance will only pay if your damages exceed the amount of insurance that the other driver has.  If you settle for an amount that is less than or equal to the maximum coverage listed on the other driver's insurance policy, the UI/UIM coverage may not apply - and you will be stuck footing the bill for any other damages you sustained that you didn't get a recovery for.  This is yet another reason to call an experienced attorney like Jeff Rasansky at Rasansky Law Firm in Dallas, Texas soon after you have a car or motorcycle accident.

Will Filing an Underinsured Motorist Claim Make My Insurance Go Up?

It is a common concern of many people that if you file a UI/UIM claim that your insurance premiums will go up.  This is a legitimate concern, as insurance carriers frequently raise rates for other types of claims.  Fortunately, that’s not the case with this special type of coverage. Texas law prohibits UI/UIM carriers from raising your rates because you file a claim OR because they have to pay a claim.

It’s important to keep in mind, however, that despite this Texas law, insurance carriers aren’t obligated to disclose their inability to raise rates. Many insurance companies will try to intimidate claimants to settling claims for less than they are worth.  That’s just one more reason to reach out to an experienced attorney.

What to Do After an Accident With an Underinsured Motorist

As with any car or motorcycle accident, safety comes first. Once it is safe to do so, get as much contact information from the uninsured driver (license plate number, driver’s license number, home address, phone number(s), email, and a description of the driver) and collect insurance information from underinsured drivers. You most likely won’t know whether or not the driver who collided with you is underinsured until later on, but it’s best practice to collect as much information as you can about the incident and gather contact information from the driver.  If you believe you are hurt at all, it is important to seek medical attention promptly.  Failure to do so can have a negative effect on your case.

You may also want to seek the advice of an experienced uninsured motorist claim attorney.  He or she can help you wade through the intricacies of personal injury and UI/UIM coverage laws.