Liability insurance pays for bodily injury and property damage to others in a car accident. The insurance of the driver who is at fault is responsible for paying the claim. In Colorado, however, about 13 percent of drivers have no liability insurance despite a state law that makes failure to have at least some liability insurance a misdemeanor punishable by suspension of driver’s license, a $1,000 fine and a year in jail. In addition, many other drivers have purchased only a small amount of liability insurance, which could be inadequate in a major accident.
Because COVID-19 has thrown the economy into disarray, some insurers are allowing customers to defer payments on their liability insurance or providing refunds because customers are driving less than they did before the pandemic. Payments that have been deferred will need to be paid eventually, however. If customers are unable to make the payments later, their insurance may lapse, creating an even larger pool of individuals without liability insurance. While that represents bad news to them, it also means bad news for you if you have been injured in a car accident caused by these individuals who have no insurance.
What is UI and UIM?
If an individual without liability insurance is at fault in an accident, he or she is unlikely to be able to pay you for any injuries you or one of your passengers sustained. Fortunately, you can buy insurance that will provide coverage in this situation. UI, or uninsured motorist insurance, pays for injuries you and your passengers sustain, up to the policy limits, if the person has no liability insurance. UIM, or underinsured motorist insurance, does this if the limits of their liability insurance are less than the amount needed to cover treatment and lost wages for you and your passengers.
The Importance of Carrying Sufficient UI and UIM
Without UI and UIM, you may be stuck paying for your own injuries and those of your passengers in accidents that were the fault of someone else. While some auto accident injuries are minor, many require extensive therapy or hospitalization. For example, suppose you and your family are out for a drive and are hit by an uninsured motorist. Your injuries and lost wages total $500,000. Your UI will pay you for these damages, as long as you carry sufficient a sufficient amount. Likewise, suppose the other driver is underinsured, carrying a low limit of only $50,000 of bodily injury insurance. Your UIM will make up the $450,000 difference.
The Hopson Agency serves Greater Denver and can provide advice on the amount of UI and UIM you need to carry on your auto insurance, as well as on other questions related to auto, life, small business, and homeowners’ insurance. Because owner Scott Hopson is an independent agent, he can choose from products offered by many insurance companies to find the best one for your needs and budget. Call the Hopson Agency to schedule an appointment today.