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Do I Really Need UM Insurance in California?

Man trying to understand if he needs UM insurance

We’ve addressed the topic of uninsured motorist (UM) insurance a few times in some of our recent articles. However, we’ve yet to devote an article to explaining exactly what UM insurance is, and we thought it was time to do just that.

A lot of our clients have questions about UM insurance.

  • Do I need it?
  • What good will it do me?
  • How much does it cost?

In this article, we’re going to take some time to explain the basics of how UM insurance works in California, and why it’s almost always a good thing to have. We will also discuss UM’s cousin, UIM coverage.

This article deals primarily with UM insurance in the state of California. If you are in another state, the requirements may vary somewhat, but UM coverage is basically the same everywhere.

What Is Uninsured Motorist Coverage?

Uninsured motorist coverage, quite simply, is insurance coverage which is designed to ensure that the policyholder will be covered in the event of not-at-fault collision with an uninsured motorist.

Wait a moment, you might be saying. Uninsured motorists? I thought that the law required every driver to have auto insurance!

Well, yes, it does, in California and most other states. (New Hampshire and Virginia are the two major exceptions.) But even where insurance is required, people don’t always follow the law.

Despite the strict penalties in California for driving without proper insurance, it turns out that a sizeable percentage of drivers on our roads are completely uninsured.

How Many Drivers Lack Proper Insurance?

We know that the percentage of uninsured drivers is far too high. It’s difficult to come up with a precise answer, but the best statistics on the matter are kept by the Insurance Information Institute, which estimates that 12.6% of American motorists are uninsured.

The problem is worse in some states than in others. According to the Insurance Information Institute, the worst state for uninsured motorists is Oklahoma, where fully 25.9% of drivers on the road are uninsured. The state with the lowest percentage of uninsured motorists is Massachusetts, with “only” 3.9% of drivers uninsured.

(Interestingly, Virginia and New Hampshire, the two states where insurance is optional, tend to be only average or even slightly better than average when it comes to their rate of uninsured drivers, ranking 31st worst and 34th worst respectively, with 10.1% and 9.3% of drivers uninsured. This would seem to indicate that mandatory auto insurance laws don’t really have an effect on actual rates of uninsured driving, but that’s a discussion for another day.)

What about California? Well, our state is right in the middle of the pack, slightly above the national average. Approximately 14.7% of California motorists are uninsured. This is just a little over 1 in 7 drivers. So if you point to a random car on California roads, there’s a 1 in 7 chance it will be uninsured.

That also means that if you get in a car accident on California roads, there’s at least a 1 in 7 chance that the other driver will be uninsured.

Scared yet?

Yeah, we thought so. It is estimated that more than three thousand people are killed every year on California roads. Thousands more are injured or suffer severe property damage. And if 1 out of every 7 California drivers is uninsured, that’s a lot of accidents that occur involving drivers with no insurance coverage.

Why Are There So Many Uninsured Motorists?

You’d think that every driver on the road would want to have insurance. If you get in a car accident where you were at fault and you don’t have insurance, you can be sued directly for the costs of the accident, which might cost you hundreds of thousands of dollars and throw you into financial ruin.

In addition, drivers are punished quite severely if the police find out that you are uninsured. In California, you may have your license suspended, face an expensive fine, or even lose your car. Punishments in other states vary, but most are just as harsh. So why would any driver want to risk this?

There are a few reasons why drivers do not purchase insurance. Some are simply careless and forget to buy it. Other uninsured motorists might want to hide from the authorities for various reasons; they might be on the run from the law, or they might not be in the United States legally.

In most cases, however, uninsured motorists do not buy insurance because they can’t afford it. Some people need to drive to keep a job, but still can’t afford all the costs associated with owning a car. Since gas and repairs are often necessary, insurance coverage in these cases is often the first thing to go.

There seems to be at least some anecdotal evidence to support the notion that uninsured driving is a consequence of financial hardship; after the financial crisis of 2008, the level of uninsured motorists went up, whereas it tends to go down in times of economic prosperity.

What Happens If I Get in a Crash with an Uninsured Motorist?

Ordinarily, if you were in a multi-vehicle accident and the other driver was at fault, you would file a third party claim with the other driver’s insurance provider.

But if the other driver has no insurance provider, your only option is to directly file a lawsuit against the responsible driver, to make them pay for the damages they caused you.

A lawsuit against an uninsured motorist, however, might not always turn out well for the plaintiff, even if the defendant was at fault. Recall, as we mentioned above, that most uninsured drivers are poor and drive without insurance because they cannot afford it.

This means that the driver who hit you will only have so many assets to seize. If your damages were high, then the other driver simply might not be able to afford to pay all of them out of pocket. And at that point, there’s not a lot that the courts can do for you.

This is one of the more counterintuitive aspects of our legal system: people who lack assets to pay personal injury damages are basically “judgment proof.” It’s hard, and unfair to those who suffer a legitimate injury at the hands of one of these people, but there is no other option.

You just can’t recover assets from a person who has none, unless you force them into slavery… and our justice system isn’t too keen on doing that, as you can probably guess.

So, if you’re in an accident with an uninsured motorist, and they were at fault, there’s a good chance that you’ll receive little to nothing in damages.

Uninsured motorist coverage is the only way out of this. When you purchase UM coverage, you give yourself a way to collect damages in the event that you are in a collision with an uninsured motorist, even if they cannot afford to compensate you.

So What Is UM Coverage, Exactly?

Here’s how uninsured motorist coverage works: after you are in an accident with an uninsured driver, you file a first party claim against your own insurance company, from which you bought the UM coverage.

If you can prove that the other driver was uninsured, then you will be able to collect damages from your own insurance company for your injuries and/or property damage, up to the limits of your UM policy.

There are two types of uninsured motorist coverage: bodily injury coverage and property damage coverage. Bodily injury coverage will pay for your medical bills in the event of a collision with an uninsured motorist, and property damage coverage will pay for any damage to your car, and may also cover other property which was damaged or destroyed in the accident. You can buy either, or both, of these types of UM coverage.

For many of our clients, UM coverage has been a veritable lifesaver. It allows drivers who are in collisions with at-fault uninsured drivers to collect some or all of the damages to which they are rightfully entitled, when otherwise they would have been able to collect nothing.

You might think you’ll never need UM coverage, and indeed you may not. But there’s a chance you will, and if you do, you’ll be very grateful you bought it.

What About UIM Coverage?

UIM coverage is similar to UM coverage, but the two are not quite the same thing and should not be confused.

UIM coverage stands for underinsured motorist coverage, and it is used in situations when you are in a collision with an at-fault driver who did have liability insurance, but whose insurance was not enough to cover your damages (even if it met the legal policy limit requirements).

If the other driver’s liability insurance limits have been exhausted, but you still have some damages left that have not been covered, then you can file a UIM claim with your own insurance company and recover additional damages… but only after you’ve gotten everything you can get from the other driver’s insurance.

The term “underinsured” as it pertains to UIM coverage is a relative term… relative to how much UIM coverage you have. You will only be able to recover UIM damages if your policy limits for UIM coverage are above the liability insurance limits of the other driver.

If their liability limits are $30,000, for instance, and your UIM limits are $30,000, then you won’t be able to recover any UIM damages. But if your UIM limits are higher than their policy limits, then you will be able to recover damages (although just how much depends on how well you are insured).

As with UM coverage, UIM coverage can be divided into two different categories: bodily injury coverage and property damage coverage, and you may purchase either or both of these types of insurance.

Are UM and UIM Coverage Mandatory or Optional?

In California, UM coverage and UIM coverage are optional for drivers.

Insurance companies are required to offer UM coverage to their clients in California, but it is entirely the driver’s choice whether or not to accept the policy.

This isn’t true in all states. 23 jurisdictions, including the District of Columbia, require all motorists to buy UM coverage. The largest states where UM coverage is mandatory are New York and Illinois.

Even in these states, however, the precise requirements differ. The legally mandated policy limits vary from state to state. Also, some states only require UM bodily injury, but not property damage, and some require UM coverage, but not UIM. Other states do not require UM coverage, and (unlike California) do not even require insurers to offer it.

If you’re outside of California, then you should check your state laws before buying insurance or turning down UM coverage. But as a California driver, the choice is all yours.

Even so, we recommend that you get it.

How Much Does UM Coverage Cost?

Typically, not a whole lot.

Since California only has an average number of uninsured motorists, UM coverage here isn’t too expensive. (It’s much higher in states like Oklahoma with a lot of uninsured drivers on the road, and lower in states with fewer uninsured drivers.)

Of course, it depends on your particular policy. Overall, however, UM coverage usually won’t cost more than 10% or so of your total policy. This typically adds up to a few dollars a month, or perhaps a hundred extra dollars a year.

Is this worth it, to protect you and your family from the potential financial devastation that comes with being hit by an uninsured driver who may also be poor enough to be “judgment proof”? We’ll let you make your own mind on that.

But we’ve seen so many cases over the course of our practice where UM insurance has proven to be a godsend that we think you can probably figure out what we recommend. A few extra dollars a month is a small price to pay for protection from one of the 1 in 7 uninsured drivers on our roads.

What about UIM coverage? It might not be as necessary as UM coverage, but it can still really come in handy in a pinch, dramatically increasing the amount of damages which you are eligible to recover, and typically doesn’t cost that much, either.

Still, the cost-benefit tradeoff of UIM is a bit murkier than that of UM, so you may choose to forgo it if you truly cannot afford it.

Is “Stacking” Insurance Allowed in California?

Stacking is a method by which you can increase the limits of a UM or UIM policy, so that it covers more than it would have otherwise.

There are a couple of ways that stacking can be done. If you have multiple cars on a single UM/UIM insurance policy, then you can multiply the policy limits by the number of cars you have on that policy. For instance, if you have two cars, you can get twice as much, if you have three cars, you can get three times as much, and so on.

Another way to stack involves filing claims with multiple UM/UIM coverage policies. Together, these policies combine to provide you with the full amount of your damages, or as much as they can collectively cover.

As you might imagine, this is a controversial practice, and not all states permit it. Unfortunately, California is one of the states where stacking is banned, so don’t be misled into thinking you can try any of these techniques.

Other states allow stacking, but they often have different restrictions and stipulations on the process. Before attempting to stack in any state, you should consult with an attorney and find out whether it is legal, and if so, how to do it properly.

How Do I File a UM Insurance Claim?

If you are filing an uninsured motorist claim in California, you will typically need to file an SR-19C form. This is the form by which you obtain documentation from the DMV proving that the other driver was uninsured. We’ve written an article which goes into a bit more detail about the SR-19C form, which you can read here.

Unfortunately, even if you file the SR-19C form, it can still be a struggle to get your insurance company to accept a UM claim.

Remember, they don’t want to pay. It’s in their financial best interest to give you zero, so it’s a safe bet that they’ll do everything they reasonably can to deny you your claim.

Insurance adjusters may try to trip you up, or get you to say something stupid. They may deny that you really collided with an uninsured motorist, or that your injuries are as bad as you say. For a novice, all of this can be hard to deal with.

This is why, if you are filing a UM claim, you will likely need a lawyer on your side. Having a lawyer will greatly increase your leverage in negotiations with your insurance company. Getting an initial legal consultation usually doesn’t cost anything, so you have nothing to lose by exploring the possibility of getting legal representation.

In Summary

UM/UIM coverage is an important addition to any insurance policy in California.

Unlike in many other states, the decision of whether or not to buy UM/UIM coverage has not been made for you. It rests entirely in your hands.

However, although UM/UIM coverage may be optional, it is almost certainly well worth buying. No matter how cautious of a driver you are, you never know when you may have a run-in with an uninsured motorist. And if that happens, you want to be protected.



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