Good everybody has insurance - but what if you are dealing with uninsured or under-insured motorists?
Good everybody has insurance – but what if you are dealing with uninsured or under-insured motorists?

In a recent case handled by the Illinois Supreme Court, it was ruled that an auto insurer’s policy time period on statute of limitation does not have to match the public policy. This developed as a result from an accident that occurred in 2007 involving Terry J. Whitehead and an uninsured motorist. In Wisconsin, there is a three year statute of limitations on bodily injury claims. After the accident in 2007, Whitehead filed a claim for uninsured motorist coverage. Her insurance company, Country Preferred Insurance Co., claimed they made efforts from the time of the claim until 2009 to gather all the necessary information to settle the uninsured motorist claim.

During 2009, Whitehead obtained an attorney. There were disagreements between herself and the insurance company as to the original date the claim was filed. Country Preferred requested that a court look at the issue to help determine coverage. Whitehead argued that since the state of Wisconsin had a three year statute of limitations, that amount of time should also apply to her insurance claim. The Illinois State Supreme Court disagreed, stating that, “Nothing of record indicates that Whitehead lacked information necessary to pursue her claim against Country Preferred in a timely manner or that she was legally incompetent to do.” This was a win for an insurance company and helped clarify the difference between state and insurer policy limitations. Wisconsin residents now have a definitive answer on where to turn for accurate claim time periods but that doesn’t mean if you don’t live in Wisconsin, you can’t equip yourself with the facts.

What is Uninsured Motorist Insurance?

First, let’s make an important distinction. When discussing this type of insurance, it is often accompanied with underinsured motorist insurance as well although they are not required to be purchased together.

If you are in an accident and the other driver is legally responsible as well as uninsured or underinsured, having this type of coverage can pay for any injuries sustained by you as well as your passengers and possibly property damage. It is important not to assume that just because your state requires that all drivers have insurance, everyone on the road actually does. The Insurance Research Council (IRC) estimated that 13.8% of drivers are uninsured. The percentage can vary based on population but with gathered data from 2009, the lowest uninsured percentage of drivers was in Massachusetts, sitting at 4% and the highest rate was in Mississippi, with a staggering 28% of its drivers being uninsured. So, if you ever find yourself in rush hour traffic in Mississippi without uninsured motorist coverage, it would be wise to exercise your defensive driving techniques. On a serious note though, these statistics prove how important this type of coverage is.

The same principle applies for underinsured motorist coverage. If the other driver does not have payment limits that are high enough to cover any of the damage incurred in the accident, your uninsured coverage can pay.

The Different Types of Insurance Available

When you go to add these options to your policy, you will notice that it has been divided into subcategories: underinsured motorist protection, uninsured motorist property damage, and uninsured motorist bodily injury.

Underinsured Motorist Protection (UIM): This part of a policy pays for the damages that exceed the amount other driver’s insurance will cover. Since they are underinsured, they do have some form of insurance, it just does not cover the expense caused by the accident. Your insurance company will only cover up to the total of your policy limit. So, if you have a $300,000 limit and the other driver’s insurance provides $100,000, your insurance company will provide $200,000 (the remaining to meet your limit).

Uninsured Motorist Property Damage (UMPD): This is an important aspect of a policy to look into if you are considering leaving Collision Insurance off of your policy. Perhaps your car is older and the premiums cost more than it would be to cover the loss of the car. If you opt for UMPD, it can be a way to protect your car without raising your premiums. Just because she’s an old car doesn’t mean someone doesn’t need to watch out for her.

Uninsured Motorist Bodily Injury (UMBI): Some might question why this policy is important to have if they already have health insurance and/or disability insurance. With UMBI, you can be compensated for lost wages, whereas with the other two policies, that is not possible.  It can also cover medical expenses and other damages caused by an at fault uninsured driver. If the driver is underinsured, then your insurance company will cover the amount the other driver cannot, up to the limit in your policy.

Making a Claim

If you choose this coverage and find yourself in an accident with an uninsured/underinsured driver, the responsibility to notify the insurance company automatically falls on that driver. Please don’t wait for them to contact your insurance company. Automatically call your insurance company to report the claim and even though the company will be acting in the interest of the uninsured driver, it is important not to let claim times get out of hand. Just ask Terry J. Whitehead. While it is important to make sure that you are rightfully compensated, court costs have the potential to cause more damage than the original accident.

Why should I get this coverage?

Because Insurance Information Institute Vice President Carolyn Gorman says so! “You absolutely need this coverage, because, if you get into an accident with someone who is driving without insurance or doesn’t have enough of it, you want to be made financially whole again. You have to protect yourself fiscally and physically, and uninsured/underinsured motorist protection can help you in that regard.”

As a driver, you can only control how well you manage your own driving. Considering the number of other drivers on the road, it is in your best interest to equip yourself with all the precautionary policies you can afford.