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How Uninsured Motorist Insurance protects you in a personal injury claim.

Why Uninsured and Underinsured Motorist Coverage is the Most Important Insurance You May Not Have.

One in an Educational Series from Oxner Thomas + Permar, pllc

All too often we receive calls from family and friends of an injured person who has just been in a tragic automobile accident. She may be in the hospital, or just released. She and her loved ones come to us looking for justice and restoration. One of the most difficult things we have to do as attorneys is to tell a client that this may never be possible because the other driver either carried no automobile insurance or the amount of insurance they did have is far too little to compensate for the medical bills, wage loss, permanent damages, pain and suffering, and losses to the family. It is clearly not the time for a lecture on the importance of buying additional insurance.

While North Carolina law mandates that every driver purchase auto insurance the Insurance Research Council’s 2006 report found 8% of the drivers in North Carolina are uninsured. Our neighbors in Virginia and South Carolina are even worse with each state having 10% of its’ licensed population driving without insurance. Worse yet, these drivers are involved in a disproportionate number of accidents. Indeed an AAA study found that 20% of all fatal accidents involve a non-licensed and uninsured motorist. In North Carolina alone last year there were 16,000 claims for accidents involving uninsured motorists with a cost of $80,000,000.00 associated with these. That statistic, while alarming, doesn’t begin to address those drivers who carry only the minimum limits required by law. Currently in North Carolina this is $30,000.00 per person and a maximum of $60,000.00 per accident. This was increased from the $25,000/$50,000 limits that both Virginia and South Carolina have, but this occurred over the objections of the insurance industry.

Many consumer groups argue that the minimum limits should be at least $50,000.00 per person and $100,000.00 per accident. It is our recommendation, however, that you purchase substantially more than that – and it won’t cost nearly as much as you might think.
Many, if not most, of our clients in personal injury claims have medical bills of $30,000.00 or more. While it sounds like a lot it really isn’t. Blue Cross Blue Shield of North Carolina estimates the medical cost of a broken leg to be $10,402.00 or repair of shoulder injury to be $13,805.00 to $14,934.00 depending on the complexity of the injury. But those are the costs of just outpatient procedures. Stay at the hospital and have basic back surgery and you’ll pay $22,798.00. If that surgery doesn’t work the most common next step, one that over a hundred of our clients have had, will cost another $62,982.00. Add to that the cost of follow-up care with your physician, physical or occupational therapy, and your permanent disability and you’ve exhausted any potential insurance benefits which might be obtained from the liable driver.

“Thank God I’ve got major medical health insurance” you may be saying to yourself right now. That’s true. If you do have health insurance you’re one of the lucky ones, but not nearly as lucky as you might think. See, most health insurance companies will view payment of medical expenses in an accident as a loan and not as insurance. If you read the fine print in the plan book (you know the one you got when you first signed up for the insurance) most of the time it will have a “subrogation” clause. That means your health insurance company gets to be paid back from the proceeds of the personal injury claim. First. Before anything else comes out of that money. As in, the health insurance company will take their $30,000.00 back even if it leaves you with nothing to compensate you for your permanent injury, wage loss, or pain and suffering. It’s better than not having insurance at all, but just barely.

There are two types of insurance which you need to carry. The first is Uninsured Motorist Coverage (UM). The second is Underinsured Motorist Coverage (UIM). These are just what they sound like. You will automatically have UM insurance on your own auto policy. So if the guy who hits you has no insurance your UM policy will step in and make the payments. UIM coverage comes when you increase beyond the minimum policy limits. Say you have $50,000 per person and $100,000 per accident (50/100) limits. The same guy hits you. This time the first $30,000 will come from the UM part of your insurance and the next $20,000 will come from UIM. If you’re in an accident involving a driver with the minimum limits then your UIM policy will pay the claim from the $30,000.00 point up to the maximum of your policy. So if it isn’t unbearably expensive to carry high UIM limits then you ought to do so.

Fortunately, it isn’t expensive at all to carry a higher UM/UIM policy. For example we recently obtained quotes for a married couple, living in Greensboro, with no tickets or accidents in the last three years. A six-month premium for 50/100 limits cost only $25.00. A 100/300 was $52.00, a 250/500 was $84.00, a 500/1 million was $129.00. In fact a whopping 1 million/1 million cost only $145.00. As you can see the extra cost of UM/UIM insurance is not as high as you might think. Please, for the sake of yourselves and your loved ones, ask your insurance company to quote you UM/UIM of the full $1,000,000.00 policy. Then let’s hope you never, ever have to use it.