Uninsured and Underinsured Motorist Benefits Under Your Auto Insurance Policy
If you are injured in a motor vehicle accident caused by someone else, as part of your claim for monetary damages, you first will have access to the liability coverage under the policy of the owner of the vehicle which caused the accident. If the vehicle is uninsured (which is a violation of Pennsylvania law) or underinsured (the amount of liability coverage is not sufficient to compensate you for your losses), then you can turn to the U benefits you purchased under your own policy for additional coverage.
In this scenario, people ask, many times, why their own insurance should “have to pay” if the accident was caused by someone else. Well, the short answer is, just like you pay premiums for life insurance, disability insurance and every other kind of insurance, you are paying premiums to your own automobile insurance company for the protection of U coverage. Your insurance company does not feel bad taking your premiums, so there is no need for you to be hesitant to avail yourself of the benefits you purchased under the policy. Another nice feature in this scenario is that your own insurance company owes certain fiduciary duties to you. Therefore, unlike the insurance company for the at-fault party, your insurance company is mandated by law to investigate your claim and provide you with its findings and the bases upon which it is relying in a prompt fashion, and it must value your claim fairly and reasonably. Needless to say, it is much easier working with your own insurance company to resolve a claim, than it is with the at-fault party’s carrier.
Just like with liability coverage, every automobile insurance policy written in Pennsylvania must have a minimum of $15,000.00 in U coverage. When you purchase your policy from an insurance agent, the agent will tell you that you must purchase the same amount of U coverage as you have in liability coverage, except if you execute what are called a “sign-down” forms. To put this as succinctly and directly as possible, don’t do it!
There are so many people, today, driving around with no auto insurance or very little in liability limits that it is critically important you purchase enough U coverage to make sure that you and your family will be made whole in the event of an accident. I recommend that you carry at least $100,000.00 in U coverage, whether that be $100,000.00 on one vehicle or $50,000.00 on two vehicles that can be “stacked” (adding the limits from each covered vehicle together).
Let me try to illustrate with an extreme example. Assume that Ms. A is involved in a motor vehicle accident caused by Mr. B, and, as a result, she is paralyzed from the neck down. Ms. A’s doctors tell her that she has no chance of ever regaining feeling or movement in her arms and legs, and she will never be able to work again in her trained profession as a nurse. Ms. A and her husband have two vehicles covered under their automobile insurance policy. While they have $100,000.00 in liability limits, they executed sign down forms and have only $15,000.00 in U coverage, non-stacked. It turns out that Mr. B has no coverage at all, as he was an uninsured driver. Therefore, the only pool of insurance money to which Ms. A will have access is $15,000.00. However, if Ms. A and her husband had kept their U coverage at the same level as their liability coverage, and if they had not rejected stacking, Ms. A would have had access to $200,000.00 for her recovery.
At the time you purchase your automobile insurance policy, it may seem like a good idea to save a couple of bucks by reducing your U coverage and choosing not to stack your coverage benefits. Trust me when I say that, if you or your family is involved in a motor vehicle accident, the extra few dollars will have been money well spent.