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February 12
Uninsured/Underinsured Motorist Coverage 101
An excess UM/UIM policy could protect your clients from an all-too-common threat.

We've all heard the stories. A family of five is burdened with horrific medical bills because of an accident caused by a drunk driver who couldn't afford insurance due to his bad driving record. A child walking to school faces a lifetime of difficulty after being struck by a texting driver— struggling college student with state minimum auto limits. A pair of retired sweethearts fall victim to a hit-and-run driver.

As an insurance agent, you can't physically protect your clients from heartbreaking situations like these. But they do rely on you to protect them financially when tragedy strikes. Enter: excess Uninsured/Underinsured Motorist (UM/UIM) coverage.

Most people would buy it if they understood it. How effectively can you explain UM/UIM coverage to a client who doesn't know much about insurance? In a nutshell, it’s insurance that pays for the client's injuries from an accident caused by the owner or operator of an uninsured or underinsured vehicle. And excess UM/UIM from a personal umbrella policy pays after the auto policy's UM/UIM limits have been exhausted.

It's important for a client to understand that UM/UIM coverage comes into play when an insured is involved in an accident and the person who caused it either doesn't have any insurance or doesn't have enough insurance to pay for your client's injuries. It would also apply if your client were the victim of a hit-and-run (in a vehicle, on a bike or as a pedestrian), leaving them with nobody's insurance policy to collect against and turning it into an "uninsured" motorist claim.

How prevalent are uninsured and underinsured drivers? According to recent estimates by the Insurance Research Council, roughly one in seven drivers is uninsured. Add to that the number of drivers who carry state minimum auto limits, and it's enough to make you want to give up driving for good.

Given the type of TV commercials we see these days from some auto insurance companies, the numbers come as no surprise. Too often, the emphasis is on getting a cheap rate; drivers are besieged with ads that encourage them to buy state minimum auto limits in order to save money. There's no denying the temptation in the midst of a struggling economy—so all the more reason to make sure your clients are protected from the drivers around them, with UM/UIM coverage on both their auto and personal umbrella policies.

The full version of this article is available online.  


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