Do You Need Uninsured Motorist Coverage?

As a Los Angeles car accident lawyer, I'm frequently asked what "uninsured motorist coverage" is.   Let me explain.According to the Insurance Research Council, California leads the nation in uninsured drivers—with over 4 million people driving in this state without auto insurance! If you are in an accident , there is a 20% chance that the other driver will be uninsured.  These are staggering numbers.California’s financial responsibility laws require drivers to maintain a minimum of $15,000 in insurance coverage for each car.  Many people wisely choose to maintain more than this amount, because $15,000 is usually not enough to adequately cover property damage or injuries suffered in an accident.  So, while it's technically illegal for drivers to be uninsured, millions of people do it every day on our roads. To help combat the epidemic of uninsured drivers, California requires insurance carriers to offer uninsured motorist coverage to their policyholders.Uninsured motorist coverage is unique. In a regular scenario when two insured vehicles are in an accident, the insurance carrier for the driver at fault will pay for damages caused by its insured driver, within the policy limits. What happens if an uninsured driver causes a collision with an insured vehicle? Uninsured motorist coverage will allow an injured driver to recover damages from his or her own insurance policy.  This is unique, because the victim's own insurance carrier takes the place of the uninsured driver who caused the collision.Many times clients are confused by how this works.  They are not comfortable “suing” their own insurance carrier, and they are also concerned that seeking to recover damages from their own insurance company will cause a dramatic increase in their monthly insurance rates.  This concern is understandable, but it is incorrect.An insurance company cannot penalize you for accessing your own uninsured motorist coverage. If you have this type of coverage, it is something you pay for every month. In fact, if you review your auto insurance policy, you will see that a portion of each premium payment you make is segregated by the carrier to cover the costs of an uninsured motorist.  An insurance company would be breaching its contractual duties to you if it raises your rates in response to your lawful right to access this coverage for an accident in which you were not responsible.Uninsured motorist coverage also serves as an important protection against drivers who maintain low insurance coverage. For example, what if car A is insured for $15,000, but causes $50,000 in damages to the driver of car B? In this example, the driver of car B would seek to recover the $15,000 policy limits against car A.  Then, assuming that car B has adequate uninsured motorist coverage, the driver of car B would seek to recover the remaining $35,000 from his own insurance carrier under the uninsured motorist provision of the policy.Uninsured motorist coverage also serves as a shield against hit-and-runs, whether you are in your car, walking on the sidewalk, or riding your bicycle.  Hit-and-runs happen every day in Los Angeles—the Los Angeles Police Department estimates that there are over 20,000 cases every year. If you are injured in a hit-and-run, your uninsured motorist coverage will cover your injuries in any of the above situations, provided that the offending vehicle made physical contact with you, your car, or your bicycle.Clients often ask if there are consequences for uninsured drivers. The answer is yes—there are legal, and financial consequences. If an uninsured driver causes an accident, the DMV will be notified. If the at-fault driver cannot provide the DMV with proof of insurance, the DMV will suspend that driver’s license.There can also be serious financial consequences. If an uninsured driver causes an accident, injures someone, and the injured person uses his or her uninsured motorist coverage, the insurance company will sue the uninsured driver for reimbursement. If the uninsured driver cannot reimburse the insurance company—a likely scenario—the uninsured driver might have to file bankruptcy. This happens very often.One caveat of uninsured motorist cases is that they must be arbitrated before a private judge, known as an arbitrator. They cannot be litigated in court. Most uninsured motorist cases settle before actual arbitration, unless the insurance company disputes the value of the case. Uninsured motorist cases require unique skill and should be handled by an attorney familiar with the unique procedural requirements associated with these cases.How much uninsured motorist coverage should you purchase? The answer depends on many factors.  You should contact an attorney, financial planner, or your insurance agent to help determine how much coverage is adequate for your situation.  I strongly recommend that all my clients purchase this vital insurance coverage.For questions about your uninsured or underinsured motorist case, the Rabbi Lawyer is ready to assist, 24/6.