Do you get confused about what Uninsured/Underinsured coverage really covers? Sometimes our clients will ask us “Does this cover me when I injure someone who has no insurance?”
And the answer is, no, it’s the opposite.
This coverage will pay YOU (including the passengers in your vehicle) if:
- You are injured in an auto accident in which you are not at fault
- Have medical or related expenses that your auto policy won’t cover
… and the AT-FAULT person:
- Has no insurance or has an auto policy with very low liability limits
- Is unable to provide the financial relief owed to you for which they are liable
By law, you don’t need to purchase this coverage. It is an optional coverage as far as the State of Michigan is concerned. You can be “legal” even if you don’t purchase this coverage. We recommend having this coverage because Michigan has more drivers on the road without auto insurance than do most other states.
A Good Idea Gets Even Better!
Before No-Fault Auto Reform, purchasing Uninsured/Underinsured Motorists coverage was already a good idea. Even though we all had Unlimited Personal Injury Protection (PIP) to cover our auto accident medical costs, we could still sue at-fault drivers under certain conditions, primarily for lost wages and punitive damages.
No-Fault Auto Reform allows you to limit your PIP coverage or “opt-out” of PIP coverage. If you choose to give up your Unlimited PIP coverage, you’re more likely to be in a position to have to pay your own medical and related expenses for auto accident injuries (see our video and article titled “Auto Medical Coverage” to learn more about this.) If you are injured in an auto accident and another party has some legal responsibility who fits the above “uninsured or underinsured” criteria, your policy would pay you for your unpaid medical expenses up to the limit of your Under and Uninsured Motorists coverage.
How Much Uninsured and Underinsured Motorists Coverage Do You Need?
This depends on how much you want to risk paying out of pocket for your own (or a resident relative’s) auto accident medical expenses. One thing is certain, you need more Under and Uninsured Motorists coverage if you choose to give up your Unlimited PIP coverage.
Recommendation
We recommend purchasing the maximum coverage limits provided by your insurance company for both Liability and Uninsured/Underinsured Motorists coverages. Also recommended is an Umbrella Policy to provide additional Liability coverage; some insurance companies also offer additional coverage of Uninsured/Underinsured Motorists coverage with their Umbrella Policy.
In Summary…
No-Fault Auto Reform made Uninsured/Underinsured Motorists coverage even more important than it used to be. However, it’s still considered an “optional” coverage in Michigan, so you might not have this relatively low-priced coverage on your auto policy. Contact your agent to make sure you’re covered – ESPECIALLY if you decide not to purchase Unlimited PIP!