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Why Do I Need UM/UIM Coverage?

I’ve learned as I talk to my customers in Phoenix every day that very few people really understand what uninsured motorist and underinsured motorist (UM/UIM) coverage is.

Let me take a few minutes to help clear this up.

Uninsured motorist coverage will cover bodily injury that happens to you or anyone in your car in the event someone hits you and does not have any insurance at all – or if you are involved in a hit and run accident.  It won’t provide any physical damage coverage for your car — only for bodily injury.  If you want your car covered, you have to purchase comprehensive and collision coverage.

Underinsured motorist coverage is similar – but different.  Let’s say someone hits your car, injuring you and a friend.  The person who hit you is cited for the accident (so, they’re at fault) and they have state minimum coverage – which, here in Arizona, is 15/30/10.  This covers $15k bodily injury per person with a total of $30k for the accident, and $10k for property damage.

You and your friend have injuries amounting to $21k for you and $18k for your friend.  Your car has $8k in damage.

So, since the person who hit you only has minimum coverage – they are underinsured for this accident.  Their insurance would cover your car completely since the damage is within their limits, but their insurance would only pay $15k each toward the injuries both you and your friend sustained.  This leaves a $6k balance for you and a $3k balance for your friend that would not be covered by the insurance of the person who hit you.

This is where your underinsured motorist coverage would come into play.  Your coverage would pick up the remaining balances for both of you (up to the limits of your UIM coverage).

In Arizona, you cannot have more bodily injury coverage for yourself than you have for others.  So, in other words, if you have state minimum coverages for others (15/30/10), then the maximum amount of UM/UIM you could purchase would be the same 15/30.  The 10 for physical damage does not apply, since UM/IUM does not cover your car.

The above example explains the concepts in the simplest terms, but the incident described is a minor accident.  Imagine the same scenario, except that your injuries are major – requiring a long recovery period, retrofitting your house for a wheelchair ramp, buying a wheelchair van, etc.  If you have higher policy limits on your car insurance, you’re able to purchase a higher level of UM/UIM.  So, your UM/UIM coverage could mean the difference between being covered for the things you need when you need them (i.e. wheelchair ramp, specially-equipped vehicle, etc.) and having to come out of pocket on these purchases (or going without).  For a major accident, UM/UIM coverage can end up being a big deal.

If you have any questions about your Arizona coverage – and want to make sure you’re properly covered, give us a call anytime.  We’d be happy to review your coverage with you.

Go Time Insurance, (602) 938-1515

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