Author Topic: Do I really need uninsured motorist coverage?  (Read 8102 times)

nawhite

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Do I really need uninsured motorist coverage?
« on: November 11, 2014, 03:32:15 PM »
I'm a big fan of not over-insuring. I want to insure adequately and no more. I keep an emergency fund, drive cheap used cars bought with cash and my wife an I only drive about 6,000 miles per year (I work from home, she walks to work most days). I'm trying to decide if there is an instance where uninsured motorist coverage would help me that one of the other insurances I have would not.

Currently I have health, term life, ADD, supplementary disability, umbrella and homeowners insurance. For car insurance, I only have bodily injury and property liability coverage (actually I have medical payments too because if I have to use it one time in 15 years it pays for itself but technically this is what the emergency fund is for).

I see 4 cases of auto incidents I need to worry about:
1) My fault or no fault and I get hurt or my car damaged
2) My fault or no fault and they get hurt or their car damaged
3) Their fault or hit and run and I get hurt or my car damaged
4) Their fault or hit and run and they get hurt or their car damaged

Uninsured/underinsured motorist coverage only seems to apply to case 3. Without uninsured coverage it basically should get handled like case 1. With case 1, car repairs/replacement from emergency fund, health insurance deductible from emergency fund then health insurance kicks in. If I get really hurt or killed, my life or AD&D or disability insurance should kick in. So what else is uninsured motorist supposed to cover?

seattlecyclone

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Re: Do I really need uninsured motorist coverage?
« Reply #1 on: November 11, 2014, 03:55:02 PM »
I think you have it about right. It's supposed to cover whatever the person who hit you is liable for but is unable to pay due to lack of assets and insurance. As you mention, the things to worry about are getting hurt and ruining your car. If you're already protected against getting hurt through medical/disability insurance and you're willing to pay for a replacement car out of pocket, feel free to get rid of this insurance.

Dezrah

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Re: Do I really need uninsured motorist coverage?
« Reply #2 on: November 11, 2014, 04:04:42 PM »
Disclaimer:  I am not a lawyer.  Please consider consulting a lawyer and your insurance broker before making a final decision.  If there are factual errors in my description, please feel free to correct me.

Actually injuries from auto accidents are covered by auto insurance first (though this may vary based on what state you're from).  My husband was a personal injury attorney for a short while and frequently had to fight on behalf of his clients to get the hospitals to accept auto insurance for compensation. 

There's always a possibility you're hurt in an auto accident, it's the other guys fault, but your insurer refuses to pay and it's your job to sue the other party for damages.  If they're insured, hopefully they pay before you need to get a lawyer.  If they're not insured, there's pretty much a zero-chance of ever getting compensated, even if they have assets.  If you have the un/under-insured driver's insurance, you will be compensated relatively easily by your company who in turn will sue the other driver if they feel like it.

Personally, I'd feel perfectly comfortable not getting un/under-insured driver's insurance, but after his experiences, my husband strongly felt that we needed it, so we got it for his peace of mind.

seattlecyclone

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Re: Do I really need uninsured motorist coverage?
« Reply #3 on: November 11, 2014, 04:20:36 PM »
Actually injuries from auto accidents are covered by auto insurance first (though this may vary based on what state you're from).  My husband was a personal injury attorney for a short while and frequently had to fight on behalf of his clients to get the hospitals to accept auto insurance for compensation. 

Sure, if you have uninsured motorist coverage or personal injury coverage on your auto policy, that would kick in first. But if you opt out of having your auto insurance cover these things, your medical insurance would work the same as in any other injury situation, right?

pzxc

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Re: Do I really need uninsured motorist coverage?
« Reply #4 on: November 11, 2014, 04:22:40 PM »
Just a side note, but in some states it's compulsory, not voluntary. (Florida is one example I know of)

nawhite

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Re: Do I really need uninsured motorist coverage?
« Reply #5 on: November 11, 2014, 04:41:15 PM »
There's always a possibility you're hurt in an auto accident, it's the other guys fault, but your insurer refuses to pay and it's your job to sue the other party for damages.  If they're insured, hopefully they pay before you need to get a lawyer.  If they're not insured, there's pretty much a zero-chance of ever getting compensated, even if they have assets.  If you have the un/under-insured driver's insurance, you will be compensated relatively easily by your company who in turn will sue the other driver if they feel like it.

Personally, I'd feel perfectly comfortable not getting un/under-insured driver's insurance, but after his experiences, my husband strongly felt that we needed it, so we got it for his peace of mind.

If they refuse to pay and my health insurance hears about it, I'd bet my health insurance is going to sue them very quickly without me needing to lift a finger. Other than the deductible on your health insurance, what does it matter to you?

Just a side note, but in some states it's compulsory, not voluntary. (Florida is one example I know of)

In Colorado you have to sign a paper saying "I understand what I'm doing and I don't want it." So most insurance companies won't really tell you it's an option but they have to if you ask here.

Josiecat

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Re: Do I really need uninsured motorist coverage?
« Reply #6 on: November 11, 2014, 05:09:34 PM »
Yikes, I wouldn't risk it.  There are a lot of uninsured drivers out there. 

Lyngi

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Re: Do I really need uninsured motorist coverage?
« Reply #7 on: November 11, 2014, 06:53:13 PM »
I actually  increased my un/under-insured policy to the max.  A friend of a friend had a child hit while walking on the road.  The driver had only minimal insurance, and no assets.  The family had to pay the medical bills while burying their child.  After a few months of just a little higher premiums, my cost actually went down.   There are many people out there with little to no insurance

seattlecyclone

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Re: Do I really need uninsured motorist coverage?
« Reply #8 on: November 11, 2014, 07:32:54 PM »
I actually  increased my un/under-insured policy to the max.  A friend of a friend had a child hit while walking on the road.  The driver had only minimal insurance, and no assets.  The family had to pay the medical bills while burying their child.  After a few months of just a little higher premiums, my cost actually went down.   There are many people out there with little to no insurance

I'm so sorry to hear about what happened to this child.

Failing to buy any given insurance can have costs. There are plenty of anecdotes out there about what can happen if you skip certain coverages on your insurance. However, buying the insurance is guaranteed to have costs. The insurance companies make money selling this coverage. They have good data on the cost and probability of everything that could happen. They make you pay this amount plus a profit margin, so on average you'll be poorer with insurance than without it. But none of us are average, so we should buy insurance to protect against risks that we cannot afford to pay for if we happen to be the unlucky one.

So the question here comes down to this: what are the costs you would have to pay if you are in an accident with an uninsured motorist and you don't have uninsured motorist coverage? Can you afford these costs, or have you already secured other insurance to cover them? If you get in an accident with an uninsured motorist, you might get injured. You should already have medical insurance for that. If the injury is bad enough, you might not be able to work for a while (or ever again). You could even die. If becoming disabled or dying is something that would ruin your family's finances, you should probably have disability insurance and/or life insurance for that. Your car could be a total loss, but many of us have decided to purchase inexpensive cars and drop collision coverage, so we're already prepared to pay this cost if it comes up. What else is there? I just don't see why I should insist on carrying this insurance. The bulk of the costs it would pay are already covered by other insurances I already have to cover general injuries/disabilities/death.

lakemom

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Re: Do I really need uninsured motorist coverage?
« Reply #9 on: November 12, 2014, 06:01:35 AM »
Additional things to consider:
Is it required in the state where you live?  It is in many of them.
How will this effect your umbrella policy?  We had to 'raise' ours in order to qualify for the umbrella (basically we are at the max now on auto insurance).
Are you really willing to give up FIRE (or significantly delay it) to save a hundred bucks a year?  That is, IF you did have a catastrophic accident that ended up with huge medical bills, and a permanent disability or inability to hold a job at all.

seattlecyclone

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Re: Do I really need uninsured motorist coverage?
« Reply #10 on: November 12, 2014, 10:41:24 AM »
How will this effect your umbrella policy?  We had to 'raise' ours in order to qualify for the umbrella (basically we are at the max now on auto insurance).

Why should this have anything to do with an umbrella policy? Umbrella insurance is to pay other people for costs you are liable for.  Underinsured motorist coverage is to pay you for costs other people are liable for but cannot afford to pay.

Quote
Are you really willing to give up FIRE (or significantly delay it) to save a hundred bucks a year?  That is, IF you did have a catastrophic accident that ended up with huge medical bills, and a permanent disability or inability to hold a job at all.

If I have huge medical bills, my medical insurance will cover it (except for annual deductibles and coinsurance that I have already budgeted for). They may go after the at-fault driver to try to recover costs, but whether or not they have insurance to cover this is not my problem. If I become disabled and unable to work, my disability insurance will come into play. Again, they may try to recover costs from the at-fault driver, but whether or not they are successful in this endeavor is not my problem.

Am I misunderstanding how this all works? Seems a lot of people are very much in favor of this insurance, but I just don't see why it's so important if I already have health insurance and disability insurance. I accept that I will have some costs if I get in an accident with an uninsured motorist, but the other insurances I already have should ensure that these costs are relatively affordable.

Iron Mike Sharpe

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Re: Do I really need uninsured motorist coverage?
« Reply #11 on: November 12, 2014, 11:17:15 AM »
You might want to find out more about just what your medical insurance will and will not cover.  Also, find out about maximum benefits your health insurance will pay out.

seattlecyclone

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Re: Do I really need uninsured motorist coverage?
« Reply #12 on: November 12, 2014, 11:58:01 AM »
Yep, just read the fine print. Maximum benefits are not in place due to Obamacare.

The health insurance plan document spells out that any payment I receive from an at-fault party (whether through insurance or court settlements or otherwise) must be first applied to their costs before I see a penny. So if I have $100k of underinsured motorist coverage but I get in an accident that my health insurance pays $101k to treat, the underinsured motorist coverage would do me precisely no good.

nawhite

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Re: Do I really need uninsured motorist coverage?
« Reply #13 on: November 12, 2014, 12:34:01 PM »
I actually  increased my un/under-insured policy to the max.  A friend of a friend had a child hit while walking on the road.  The driver had only minimal insurance, and no assets.  The family had to pay the medical bills while burying their child.  After a few months of just a little higher premiums, my cost actually went down.   There are many people out there with little to no insurance

So I don't have a child so lets go through the example for me. Those medical bills will be covered by Health insurance (out of pocket max of $6500) and burial costs would come from life insurance. Even if I had a kid, and this happened to them, health insurance covers the medical bills other than the deductible which came out of the emergency fund and if I don't have enough in the e-fund for the burial, I float it for a month on a credit card.

Sure it would by far and away be the worst thing that had ever happened if I lost a child, but I don't need to be reimbursed financially (unlike if I died instead, the wife and kid would need to be reimbursed financially and that is what life insurance is for).

So while a really sad story, it isn't an example that I'm not covered for.

Are you really willing to give up FIRE (or significantly delay it) to save a hundred bucks a year?  That is, IF you did have a catastrophic accident that ended up with huge medical bills, and a permanent disability or inability to hold a job at all.

Why would that delay FIRE? I have medical health insurance and disability insurance for those things, why do I need uninsured motorist coverage?

nawhite

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Re: Do I really need uninsured motorist coverage?
« Reply #14 on: March 16, 2016, 05:30:34 PM »
I just want to open this topic back up. There was a lot of back and forth on this and no real resolution. No one has been able to say why you need uninsured motorist coverage if you have an emergency fund to cover buying a new car, your medical out of pocket maxes, an ACA compliant heath insurance plan and short and long term disability coverage.

bogart

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Re: Do I really need uninsured motorist coverage?
« Reply #15 on: March 16, 2016, 07:32:27 PM »
I'm trying to decide if there is an instance where uninsured motorist coverage would help me that one of the other insurances I have would not.

I see 4 cases of auto incidents I need to worry about:
1) My fault or no fault and I get hurt or my car damaged
2) My fault or no fault and they get hurt or their car damaged
3) Their fault or hit and run and I get hurt or my car damaged
4) Their fault or hit and run and they get hurt or their car damaged

Uninsured/underinsured motorist coverage only seems to apply to case 3. Without uninsured coverage it basically should get handled like case 1. With case 1, car repairs/replacement from emergency fund, health insurance deductible from emergency fund then health insurance kicks in. If I get really hurt or killed, my life or AD&D or disability insurance should kick in. So what else is uninsured motorist supposed to cover?

Per the internet (which as we know is never wrong) the other costs that uninsured motorist would cover are injuries (etc.?  I'm not sure...) to other people in your car.  So if you ever have passengers or allow others to drive your car, it could be relevant in those cases.  If you feel like doing a "worst case scenario," I suppose you imagine that you've picked up your college roomie at the airport and he/she is a new parent; tragically, you're hit by an uninsured motorist and your roomie is fatally maimed.  S/he only passes away after racking up major medical expenses (further tragedy, s/he was temporarily without medical insurance, having left one job and being to start another in a few months), and leaves behind an infant and a SAH-spouse, but had no life insurance.  S/he wasn't much of a planner, your roomie, but a good person nonetheless.

turketron

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Re: Do I really need uninsured motorist coverage?
« Reply #16 on: March 16, 2016, 07:42:12 PM »
The cost for my maxed un/underinsured motorist coverage is $3.59 every 6 months. Seems like a few bucks well spent.