“Who Pays the Bills?”
I’m going to discuss some of the nuances of Uninsured Motorist (UM) Bodily Injury and Underinsured Motorist (UIM) insurance coverages. We’ll talk about Stacking Coverages, Coverage Limits, and other areas to be aware of when considering these types of plans.
Quickly, let’s recap. In a typical automobile accident scenario, the at-fault driver’s insurance company would make payments compensating for their insured’s negligent driving. However, when the negligent driver doesn’t have insurance (or has insufficient coverage) the money must come from you.
Because 10% of Montana drivers are uninsured (the figure is around 12.5% nationally), it’s important to cover yourself with UM/UIM insurance and to know about the uninsured driver claim, should you be hit by an uninsured driver or involved in a hit-and-run incident. These plans will cover medical bills, wage loss, pain & suffering, and in some circumstances property damage. Let’s discuss a few of the particulars.
First, let’s talk about stacking coverages. When you stack UM insurance coverages, you’re basically doubling-down (or tripling-down, depending on the number of vehicles you own) on your policy. For instance, if I have a three-car policy covering $40,000/person on each car, I can collect $120,000/person from one accident involving an uninsured driver. Of course, to do this I must pay the premium on each of the three automobiles, but it’s typically cheaper than setting higher liability limits. The ability to stack benefits depends on where you live; Montana, along with 29 other states, currently allows UM/UIM stacking.
The second topic I’ll touch-upon is Split Limit vs. Combined Single Limit coverages. In Split Limit Coverage, coverage depends on if one person is injured or if multiple persons are injured. For instance, a coverage limit may be $20,000 per person, but $50,000 maximum (often notated 20/50 UM Bodily Injury). This means that if one individual makes a claim, they can collect $20,000. If two people make claims, they each can collect $20,000 (making $40,000 total). However, if a third person makes a claim, they will only receive $10,000, as the $50,000 maximum will then be met. This is typically how insurance limits are configured.
Conversely, Combined Single Limit policies are more ridged. The insurance company sets one pre-determined amount that will cover all injuries, regardless of the number of individuals. For instance, a $45,000 policy will cover exactly that; $45,000 in all medical bills, wage loss, and pain & suffering, regardless of the number of people involved.
These are important concepts to understand when considering UM/UIM coverage plans. For additional information, visit the Department of Motor Vehicle’s webpage: https://www.dmv.org/insurance/uninsured-motorist-coverage.ph