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The Most Misunderstood Part of the Auto Policy

By February 24, 2023Personal Insurance

If you’re in an auto accident with someone who has no insurance, and you (or a resident family member) are seriously injured, what happens if you need to sue the at-fault driver?  What happens if they have no auto insurance or just enough liability insurance to be “legal?”

The purpose of Unlimited Personal Injury Protection (PIP) on your auto policy is to pay for your medical expenses and related expenses until you are no longer incurring the expenses.  If you don’t have Unlimited PIP, you could wind up paying for these expenses yourself.  This is the point where you might need to rely on the legal system to get your bills paid.  The legal system is also where you go to sue for other economic damages and “pain and suffering” damages that your policy’s PIP won’t cover.

Two key ingredients in taking someone to court are: (1) they were at fault; (2) they have the funds to pay awarded damages.  If you were at fault, or nobody was at fault, the legal system isn’t going to work like you’d hoped.  Or, if the at-fault driver has no insurance or just enough to be “legal,” you quickly find out that winning a court case against someone with no money and no insurance (or low liability limits) doesn’t pay many bills.

Wait a hot second here.  If the other driver was at fault and has no auto insurance or not enough liability insurance to cover your auto accident medical costs, YOUR auto policy could pay you the awarded damages if you have Uninsured and Underinsured Motorists (UM/UIM) coverage.  This coverage is not required by the State of Michigan, and it’s very misunderstood.  UM/UIM pays YOU what the at-fault driver is legally obligated to pay you.  It does NOT pay the at-fault driver anything.  UM/UIM is one of the least expensive line items on your policy and it could play a pivotal role in your financial future and quality of life. 

If you tell your auto insurance agent your primary focus is to lower your auto insurance costs, you might not have UM/UIM on your auto policy.  Talk about UM/UIM with your agent — and the other optional coverages — before you find out after your auto accident how much better protected you COULD have been!