Questions about UM and UIM coverage (III)

What is the legal nature of UM coverage and UIM coverage? Are clauses mandatory or optional?

Considering the importance of UM coverage and UIM coverage, the question arises whether these clauses are mandatory or optional. It is natural that this doubt arises, as these clauses bring numerous benefits, so the law should have a section relating to mandatory or optional nature of UM coverage and UIM coverage.

As we have said on previous occasions, these clauses may have different specifications and this will depend to a certain extent on the existing regulations in the country’s states, although it is true that the central aspects are practically the same in all states. But one of the aspects contemplated by state law is precisely the compulsory or optional nature of the aforementioned clauses.

At least in the state of California, where we live, UM coverage and UIM coverage are optional. Therefore, California drivers cannot be subject to legal penalties if they choose not to contract these clauses.

There are at least 23 states where UM coverage and UIM coverage are required by law. Among them, the most notable are New York and Illinois, although Washington is also worth mentioning. The mandatory character means that motorists in these 23 states, if they do not have these clauses in their policy, can sit in court and be punished by the justice system.

However, each one of these laws must be examined individually, since each one has certain details that makes them different.  For example, a particular state may require a motorist to take out UM and UIM coverages, but the amount of coverage under these clauses will vary depending on the particular aspects of that state’s law.

In addition, a state may provide for mandatory UM and UIM coverage, but there is a possibility that it may only require coverage for personal injury and not coverage for property damage. In the same way, state regulation may contemplate the obligation to contract UM coverage, but not its homologous, UIM coverage. And, of course, there are the states that are simply indifferent about it. In fact, some states offer these clauses independently of insurance companies and therefore do not require them.

Therefore, in the event that you are living outside of California, it is highly recommended that you properly investigate and inform yourself about the legal provisions of the UM and UIM coverage of the state in which you live. If, on the other hand, you are a person living in California, then “do not worry” because you have the “freedom” to decide whether or not to include these clauses in your auto insurance.

We want to emphasize the quotation marks placed in the words “do not worry”, because there are good reasons to be concerned if your policy does not have the UM and UIM coverage clauses.

What is the price/cost of UM and UIM coverage? Are they expensive or accessible?

Here we have reached a key point in the topic of UM and UIM coverage: its price. Is it possible to purchase these clauses for economic prices? Can its purchase unbalance my finances? Below, we will provide some information that will be useful in answering these questions.

In general, the price of these clauses is not particularly high, but to qualify a price as “high”, “accessible”, “normal”, among other categories, requires analyzing the socio-economic characteristics of each of the states, as well as evaluating market factors and other aspects that usually have weight in the financial analysis. However, a financial analysis is out of bounds, so we will not do it in this article. But it’s good to take all this information into account.

In the case of California, given its position in statistics regarding the percentage of uninsured drivers (as we saw in a previous article, California is in an intermediate position, a little above average), the cost of contracting coverage for UM and UIM is not very high, so it is possible to purchase them without causing an injury to our finances (as long as you are from California, of course).

So, is the price of these clauses linked to the percentage of uninsured motorists?  Yes, and this is why it constitutes statistical evidence the claim. and the main reason drivers choose not to purchase an automobile policy is the cost.

Thus, in those states where the number of drivers lacking insurance is considerable, the price of UM and UIM coverage is high. While, on the other hand, those states that do not have a high percentage of uninsured motorists, it is possible to include these clauses at a fairly affordable price.

Also, since they are clauses, that is, additions to auto insurance, the amount of those clauses will be related to the amount of insurance coverage. Usually, UM and UIM coverages represent approximately 10% of the general coverage amount. Therefore, if you purchase these clauses, you will only pay a few dollars in addition each month. Annually, it’ll be a few hundred.

But hundreds of dollars extra annually are an amount of money that would produce an imbalance in my finances. If that is your case, then it is a good idea to re-order your expenses and set priorities. Saving in the health sector is not a very smart decision. Just think about it for a moment: would you rather run the risk of being a victim of a collision caused by an uninsured motorist who is likely to be classified as a “judgement proof”; just to save you a few hundred dollars annually?

The multitude of anecdotes, testimonials, and histories of our clients demonstrate that UM and UIM coverage are some of the best insurance resources available. Apart from that, these resources are not very expensive: we think it’s worth purchasing these clauses for only a few hundred dollars annually, if we consider especially that 1 in 7 drivers in California are not insured.

Some people think it’s a good idea to include UM coverage in the auto policy, but that it is not necessary to do the same with UIM coverage. We do not agree. The inclusion of UIM coverage will allow you to recover a greater amount of damage, at a cost that is not high either.

The former would be a smarter decision than not hiring any of the clauses. However, it is still preferable to purchase both coverages together at the same time.

Can stacking be done in California? Is that allowed?

It is very likely that you are unfamiliar with the term ‘stacking’, so we will proceed to explain it in such a way that you are familiar with the terminology used in the legal field of insurance. Basically, stacking is a way to increase UM and UIM coverage. By increasing it, you can get a higher amount of compensation in case you are part of a collision.

There are several ways to stack: for example, a very common way is to include more than one vehicle in the UM and UIM coverage. Thus, the limits of these clauses are higher than normal (practically twice as high). Suppose, for example, you are involved in an accident caused by an uninsured driver. If you have only one vehicle included in both UM and UIM coverage, the amount you could get is $10,000 (one example). But if you add two vehicles, then the UM and UIM coverage will be close to $20,000 (double).

Also, another way of implementing stacking is to file a claim together with several UM and UIM coverage clauses (yes, obviously you can have more than one). With this method, in the event of an accident where you are not legally responsible, you can take advantage of the combination of different coverages. The application of multiple limits guarantees you a more than fair compensation for all damages resulting from the accident.

We must point out that we disagree with these methods. As you can guess, this kind of practice is morally reprehensible. And it is precisely for this reason that several states have implemented various regulations to curb these methods. California is one of those states, so don’t think for a second about using any of these strategies.

Even so, not all states have a ban on these practices, so in some places they are not illegal. Although we do not agree with them, if you are thinking about using them, we strongly recommend that you contact a law firm or a personal lawyer who has extensive experience in this type of case.

For the rest, you can contact us. Whatever doubt you have, we will resolve it satisfactorily. We are also able to accompany you in any personal injury accident.

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