Understanding Auto Insurance: UM/UIM
Reading one's car insurance policy can be like reading a foreign language for the first time, a tad confusing. In dissecting the fine print, one of the most under appreciated (no pun intended) coverages available is Uninsured Motorist and Under-Insured Motorist coverage (Commonly known as UM and UIM).
The role of UM coverage is to step into the shoes of an Uninsured, at-fault motorist to compensate the injured insured. In Florida, it is required that all drivers carry a certain amount of personal injury protection (or PIP) and property damage coverage. These however, only cover the policy holder's injuries and property damage caused by the policyholder. Basically, if you are in an accident with one who holds minimum coverage in the State of Florida and is at-fault, they will not possess insurance to cover your medical expenses. That does not mean that they are not liable. It just means that you could be looking at months before you see any compensation for potentially staggering medical expenses, if any compensation at all. Since the law does not contain a minimum standard for Bodily Injury Liability coverage, some people will not have that coverage, and that's why UM is so important.
There are several scenarios in which UM can come into play. For example, What if you're in an accident and you don't know the other person's identity, or their information? How can you be compensated? This is another scenario where UM can kick in; the tragic case of a hit and run. Your insurance company will treat the John Doe as an uninsured motorist, just the same as if it were a known person who was not insured. UIM operates the same way. If the at-fault driver is carrying less coverage than your damages, your UIM coverage can be added to the underlying coverage. Say the at fault driver has 25k in Bodily injury coverage and you have UIM limits of 50k, UIM may kick in to cover an additional 50k in damages if your injuries exceed 25k. So what does UM/UIM insurance entitle you to? The compensation offered from UM/UIM coverage primarily covers your bodily injury expenses from the accident, including medical expenses in the past and future. In addition to those primary forms of compensation, the victim may be eligible to recoup loss wages, loss of earning capacity, and pain and suffering (if you are permanently injured and depending on the size of your coverage and your injury). Also, keep in mind that auto insurance should be primary for any medical bills stemming from an auto accident, and that health insurance would be secondary. In particular, property damage can be measured in a number of ways and will more than likely depend on the language in your policy.
Here are a few of ways that damage to real or personal property can be measured: Reasonable costs of repair; Replacement value; Market value; Actual cash value; or Cost, minus depreciation, which is the loss of value that is due to use, or wear-and-tear