In todays economy, people are trying to save money any way that they can. To some, this means cutting back on, or even worse, completely eliminating their auto insurance coverage. What happens if youre in an accident and the other driver has no insurance? Or what if the driver is underinsured? Will you be covered? You will be if you have uninsured or underinsured (UM/UIM) coverage.
To help get a better understanding of uninsured or underinsured coverage, consider these scenarios:
If you buy UM/UIM insurance and a driver who has no insurance (or not enough insurance) hurts you, then your insurance company will pay you damages up to the limits of the UM/UIM coverage you bought. Since the other driver is uninsured or under-insured, your company pays you.
UM/UIM is also very important for another reason. If you are the victim of a hit and run and the other driver is never caught, your UM/UIM coverage will protect you.
Finally, your under-insured motorist coverage will also protect you if the other party had less insurance than you did. If you get hit by someone who bought a low amount of insurance, then your own policy will provide you protection up to the amount that you bought for yourself.
Washington State laws require all drivers to have a minimum of $25,000 in coverage, yet a stunning amount of Washington drivers dont have any insurance at all. Statistics show that around 21% of Washington drivers who are involved in some sort of accident do not have insurance. People may have lost their jobs, and decided that they could no longer afford insurance. If that is the case, how are they supposed to pay for damages they cause in an accident, such as your medical bills or lost wages if you are involved in an accident with them that is their fault? They wont be able to. That is why it is extremely important to have as much UM/UIM coverage as you can afford.
Looking at some statistics, it becomes even more evident that todays economy is directly affecting the rise in uninsured drivers. The Insurance Research Council (IRC) found the nationwide percentage of uninsured motorists to be 13.8 percent in 2007. They also found that this number could rise to an alarming 16.1 percent by 2010. And if the unemployment rate continues to rise, so will the number of uninsured drivers. The IRC states that an increase in the unemployment rate of 1% results in an increase in the uninsured motorists rate of more than three quarters of a percentage point.
It should be clear that it is not a recommended idea to cut back on your auto insurance, especially during this economic recession. If you want to protect yourself from underinsured and uninsured drivers, you should absolutely make sure that your insurance plan includes UM/UIM coverage. If it doesnt, I recommend you invest in as much as you can afford as soon as possible.