By Attorney Mark Malone
Selecting Underinsured Motorist Coverage (“UIM”) and Uninsured Motorist Coverage (“UM”) are two options you have when you select a motor vehicle insurance policy. Colorado mandates that you must have limits of insurance of at least $25,000.00, but UIM and UM insurance is optional. Declining these options is very risky! UM and UIM insurance allows you to claim damages from your own policy that result from a motor vehicle accident.
How does it work?
Carole gets into an accident with Joe, but Joe does not have insurance or assets! (uninsured) Carole is injured, if she has UM insurance then she can ask her insurance to aid her in medical bills, wage loss, and pain and suffering. If she does not have UM coverage she is on her own to pay her medicals and she will get nothing for the pain and suffering she is going through. Not only this, but Carole is on her own in repairing her vehicle!
Carole gets hit by Joe again! This time Joe does have insurance but he only has the state minimum coverage of $25,000. Carole is badly injured and needs a surgery of $50,000, Joe’s insurance offers the policy limits of $25,000 and Joe has no assets. Carole does no have UIM insurance! (underinsured) She is again out of luck! She will have to pay the difference for her surgery either through private health insurance or on her own, she will get nothing for her pain and suffering or lost wages.
Boom, Carole is hit by Joe again. Joe still has his limited policy of $25,000 and no assets. Carole needs surgery for $50,000.00, Carole has UIM benefits this time! But only for $25,000. She will be able to cover her medical bills, but she is not going to recover anything for her pain and suffering or lost wages.
Carole has had enough, she gets a $50,000 policy, she gets UIM and UM coverage of $50,000, Joe hits her with his low policy limits for only $25,000, she needs the $50,000 surgery, she will be able to pay her medicals and she will likely to be able to get $25,000 for her pain and suffering.
What if Joe had assets….
If Joe had assets in theses scenarios and did not have enough motor vehicle insurance, Carole would be able to go after him personally! This is a big risk!
Recommendation. If you own a home, have a retirement account or any asset, you need to have full coverage of more than just the state minimum of $25,000, if you do not have insurance or have the minimum then your assets are at risk!
All motor vehicle drivers should have at least $50,000 to $100,000 worth of coverage with UIM and UM coverage, and even then, that still may not be enough depending on the accident details. A simple fender bender with soft tissue injuries can easily reach $25,000 when you take into account medicals, out-of-pocket costs, lost wages, and pain and suffering damages.
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