Most people know it is necessary to carry adequate automobile liability insurance. If a claim is brought against you, the insurance company provides for your defense and the payment of any judgment or settlement. What many people do not realize is that failing to carry adequate uninsured motorist (“UM”) coverage can lead to a financial disaster, even if the other driver is at fault! Statistics show that the number of uninsured drivers is on the rise. According to a recent Insurance Research Council nationwide study, if someone is injured in an automobile accident, the chances are 1 in 7 that the at-fault driver is uninsured. In Tennessee, the estimated percentage of uninsured motorists is 21%.
These statistics reinforce the need for drivers to carry UM coverage. State law requires that every automobile liability policy include UM coverage with limits equal to the liability limits provided for in the policy. The policyholder must sign a written notice to decline the UM coverage. Often UM coverage is rejected because the consumer does not understand the nature of the coverage, or is trying to save money on premiums.
UM coverage steps in and pays for damages caused by the at-fault driver who is uninsured. Similarly, underinsured motorist coverage (“UIM”) takes care of the situation where the at-fault driver has some insurance, but not enough to adequately compensate the injured party. Under either scenario, the policy pays for any aspect of bodily injury damages that the injured party could recover from the at-fault driver, such as medical expenses, lost earnings, pain and suffering, loss of consortium or damages recoverable in a wrongful death suit. UM coverage provides protection not only if you are in your own car, but also if you are in someone else’s vehicle. The coverage also extends to the policyholder’s family members and covers other vehicle-related accidents, such as hit and runs, or pedestrians or cyclists who are struck by a car.
In a serious accident, it is not uncommon for an injured party to suffer hundreds of thousands of dollars in damages. While health insurance may pay most medical expenses, it will not cover other out-of-pocket expenses, lost earnings, permanent disability or pain and suffering. Maintaining adequate UM limits is one way to insure that you are able to recover, even if the at-fault driver is uninsured.
To make sure you are protected, maintain adequate liability and UM coverage. If you are involved in an accident, regardless of who is at fault, there are a few things to keep in mind. First, make sure the police make a report for the accident and try to obtain the other party’s insurance information as soon as possible. Secondly, even if the other driver is clearly at fault, put your insurance company on notice of the accident. Placing the carrier on notice will not cause your insurance rates to increase and is essential if it is later discovered that the other driver does not have insurance, or is underinsured. Lastly, if you are involved in an accident, consult with a lawyer to make sure you understand your rights and obligations under the policy.
Dan Berexa is a partner in the Nashville, Tennessee law firm Cornelius & Collins, LLP and practices in the areas of personal injury, product liability, insurance law and commercial dispute resolution. He is a 1991 graduate of the University of Tennessee School of Law.
Copyright 2008 by Daniel P. Berexa. All rights reserved.
