Wake Up Behind the Wheel! Uninsured and Underinsured Motorists – A Cautionary Tale on National Car Insurance Day

No one is sending out greeting cards for National Car Insurance Day, but reviewing your auto policy on this day could be the most valuable gift you give yourself. Coverage limits and policy details that were once adequate may no longer provide the protection you need.

Knocking on Wood Doesn’t Equal Protection

As we head into National Car Insurance Day 2024 on February 1, it’s important to understand that recent rate spikes are driving more motorists to drop their coverage. That’s right: that means they’re driving around without insurance, hoping nothing bad will happen. As with  other important financial matters in life, “hope is not a method,” says personal injury attorney Jolie Deutschman at Rockville, Maryland-based law firm Stein Sperling.

Deutschman explains that the insurance crisis is not only an affordability issue for budget-stretched motorists — it’s also a safety problem and financial risk for insured drivers, whose auto policy might not have enough uninsured and underinsured motorist coverage to protect them after a crash. To put this in perspective, did you know car crashes are a leading cause of injury and death in the U.S.? At least 7.3 million motor vehicle accidents occur each year across the nation, which works out to roughly: 19,937 crashes every day. That number is staggering. And if you are uninsured, underinsured, or are involved in an incident with a motorist who falls into one of those categories, you could be facing devastating financial challenges.

Knowledge is Power

All of this adds up to how crucial it is to review your current policy to get a better understanding of your coverage:

Coverage Limits: Coverage limits that may have been adequate in the past now have to be substantially higher to cover potential property damage and injury liability situations.

Increased Premiums for Less Coverage: Despite the reduced coverage limits, policyholders are facing increased premiums. Factors contributing to this include a spike in reckless driving incidents post pandemic, leading to more frequent and severe accidents, as well as  higher costs for vehicle repairs and replacements. In fact, says Deutschman, insurance companies are raising rates because they’re not making the amount of money they want (or sometimes need) anymore. Insurance is a business, after all.

Rise in Uninsured or Underinsured Motorists: The increased insurance costs have also led to an alarming trend of more motorists opting to drive without insurance or with minimal coverage. This situation poses a significant risk to insured drivers, potentially leaving them inadequately protected in case of an accident with an uninsured or underinsured motorist. Did you know it is not illegal to drive without insurance in some states? Well, it’s true! Virginia for example, just charges an uninsured motorist a $500 fee to the DMV.

The Policy Holders’ Perfect Storm

All of these challenges put regular law-abiding drivers who keep their insurance at legally required levels at a disadvantage. Why, you ask?

  • Your chances of getting hit by an uninsured or underinsured driver are higher.

  • You can’t always prove the other motorist was uninsured at the scene of an incident, because even if they flash an insurance card, it could be lapsed or the bill could be unpaid.

  • Your own auto insurance might not have the right types or level of coverage.

Deutschman encourages drivers to look at their policies and make sure they’re truly covered at the right limits for these increasing risks. Coverage limits that were fine in 2019 probably need to be higher in 2023 and beyond. For example:

  • Bodily Injury (Liability): People are driving more and longer distances these days than 10 years ago. So, the chances of being in a crash have dramatically increased. Our cars are getting larger and larger, so the odds that the accident will have more significant property damage, and the injuries will be worse, is more likely. Medical care costs have increased, and many people do not have any (or good) health insurance plans. So, making sure that your liability limits are adequate in the event you, or someone driving your car, seriously injures someone else, is essential. It can be the difference between having good insurance to settle a case or being sued for a lot of money, and putting your hard-earned personal assets at risk!

  •  Uninsured or Underinsured Motorist: Since you cannot predict what insurance will be available if you’re hit by someone else, the laws in the DMV require all insurance companies to write Uninsured/Underinsured Motorist coverage. This coverage protects you and your family/passengers if you’re injured by a motorist who has no insurance or does not have enough insurance coverage to pay for the resulting injuries/damages.

  • Personal Injury Protection/Medical Payment Coverage: All insurers in the DMV are required to offer personal injury protection (PIP) and/or Medical Payment (Medpay) coverage. These coverages act like accidental health insurance and wage loss protection in the event you’re injured or lose work as a result of an accident. They are sold in differing levels but can provide funds to reimburse lost wages and out of pocket medical expenses. They’re “no fault” coverages so they’re available even if you are at fault for an accident and will not affect your policy if used to help pay/reimburse bills for medical care or lost wages.

What Should You Do?

Review your auto policy now – looking at your coverages AFTER an accident, is too late! Pay attention to:

  • Who is insured – All household licensed drivers should be listed as named or additional drivers. Also, some insurance companies ask for the names of ALL adults of driving age who live with you. Look carefully at the application or renewals when getting/updating coverage. Failing to properly disclose everyone who meets the requested criteria  could mean that your insurer later denies coverage if an undisclosed resident relative needs the coverage. When minor children reach driving age, be sure to add them on to your policy. The same applies if you have a friend/relative/nanny/caretaker who moves in and regularly drives your car. Failure to properly disclose all possible drivers to your insurance company can lead to denials in the event the insurer never accepted the risk of that person being in your household/driving your vehicle.

  • The types of coverage you have elected – “Full Coverage” does not mean you are fully protected! It only means your car will get paid for by your own insurance company in the event of an accident. It does not cover injuries or medical expenses. Investigating the coverages mentioned above, and making sure you have good (high) limits for Bodily Injury (Liability), Uninsured/Underinsured and PIP/Medpay coverages is the only way to protect you/your family/passengers from the unknown.

Never assume another driver is going to have the coverage you need to protect you/your family or your passengers, says Deutschman. You cannot control how much insurance another driver has, but you can take steps now to ensure your own insurance is sufficient to protect you in the event of an accident.