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Uninsured Motorist and Underinsured Motorist Coverage UM and UIM – what does it REALLY mean?

August 27, 2010

Cindy Donaldson, Director of Marketing & Personal Lines Sales - Founders Insurance Group

Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverages are included in most Auto policies but many people really don’t understand what they mean. So here’s the scoop: (information from the Connecticut Insurance Department and is specific to autos insured in Connecticut, rules and limits vary by state and country)

Uninsured and Underinsured Motorist Coverage covers you in the case of bodily injury to you, your relatives who live with you and your passengers if they are injured in an accident caused by an Uninsured Motorist, a motorist whose bodily injury liability limits are LESS than your Uninsured/Underinsured Motorist limits
or a hit-and-run driver.

The standard coverage is an amount equal to your Bodily Injury Liability Coverage, but you may purchase additional coverage up to an amount double your bodily injury liability. The Connecticut State minimum required by law is $20,000 per person, $40,000 per accident. (Note: At Founders Insurance Group we advise having a minimum of $100,000 per person, $300,000 per accident or higher)

Underinsured Motorist Conversion Coverage also provides for reimbursement in case you are injured by an underinsured driver. If your bodily injury costs exceed the at-fault driver’s insurance, or other payments, your underinsured motorist conversion coverage will be available for bodily injury costs not paid. This OPTIONAL coverage is NOT reduced by payments from any other source, including the at-fault driver’s liability insurance.

So are you really confused now? I always like real life examples to explain insurance, so here goes!

You are a responsible citizen and carry $300,000 in uninsured/underinsured coverage and you get into an accident where your medical bills total $400,000 caused by a driver who only has $200,000 in bodily injury liability. WITHOUT underinsured conversion coverage you would only be able to collect the $200,000 from the other driver’s insurance PLUS $100,000 from your own underinsured coverage which now equals your $300,000 limit. With the conversion coverage, you could collect the FULL $200,000 from your own underinsured coverage. Well worth the few extra bucks a year I think!

That is my insurance lesson for the day!

Give us a call at Founders Insurance Group – we will find the right coverage for your unique risks. Remember Double up on that UM and go for the conversion coverage!

Cindy Donaldson

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