Filed under Blog …

A common question we receive is why do I need Uninsured Motorist Coverage on my own policy? In Alabama 26% (1 in 4) of drivers are uninsured drivers and of those that are insured an estimated 55% only carry the minimum amount of insurance required which is $25,000 a person/$50,000 per accident. With the large amount of uninsured and/or underinsured drivers on the roads in Alabama, uninsured motorist coverage is really a necessity to cover you and your loved ones in the event of being injured in a car wreck.

How does it work? By having Uninsured Motorist coverage on your policy, you are covered in the case that the at-fault party did not have insurance as well as in the case where he or she does not have enough insurance to pay for your damages. This means that Uninsured Motorist coverage not only protects you from defendants with no insurance, but also under Alabama law can protect you in situations where the defendant does not have enough insurance. Let’s look at some scenarios.

Scenario 1: You have full coverage insurance but have elected not to have Uninsured Motorist Coverage to save money on your insurance bill. You are severely injured by a drunk driver that has no insurance on the vehicle he is driving. You go to the hospital and get treatment and have $100,000 in medical bills, which in today’s age is not uncommon given the costs of medical care. In this case, your “full coverage” policy will only cover your property damage, it will not cover your personal injuries and pain and suffering. (Medical Payment Policy will cover the costs of the bills, but this is typically around $5,000 in coverage on a typical policy).

Scenario 2: You are involved in the same wreck as above, but you have chosen Uninsured Motorist Coverage in the amount of $100,000 per person/ $300,000 per accident. Let’s also say you have 3 vehicles under this policy. In Alabama, your uninsured motorist coverage would kick in to basically step in the shoes of the DUI driver and you would have up to $300,000 in coverage for you individually and $900,000 in coverage per accident. The reason you have this amount of coverage is that in Alabama you can stack up to three vehicles per policy. A simple way to explain this is that if you have Uninsured Motorist Insurance you can take the policy amount and multiply it by the number of vehicles you have (up to 3 per policy). So if there were 2 cars in the policy, you would have $200,000 per person/ $600,000 per accident in Uninsured Motorist Coverage.

Scenario 3: You are involved in the same wreck as Scenario 1, but the DUI driver has insurance and you also have Uninsured Motorist Insurance. Let’s further assume that the DUI driver only has a minimal limits policy as required in Alabama which is $25,000 per person/ $50,000 per accident. In this case, the DUI defendant’s insurance policy of $25,000 would not be enough to pay for your $100,000 medical bills, much less compensate you for your pain and suffering and possible permanent injury. The good news, however, is that you have elected Uninsured Motorist Coverage which also in Alabama has been determined to be Underinsured Motorist Coverage. This means that if the person who hit you does not have enough insurance, thus underinsured, then your Uninsured Motorist Coverage kicks in on top of the at-fault party’s insurance. So if you had a 3 vehicle policy with 100,000/300,000 in Uninsured Motorist Coverage, then you could get up to $325,000 in insurance proceeds for your injury ($100,000 per person x 3 cars (Stacking)= $300,000 per person +$25,000 in at-fault party’s insurance.

To conclude, Uninsured Motorist Coverage really is necessary especially in Alabama. There is a high probability that you will be involved in an accident with a person driving without insurance so protect yourself. It is not only great coverage to have, but is some of the cheapest insurance you can buy. The average cost of uninsured motorist coverage is about $40 per year for about $100,000 worth of coverage.