According to a 2011 study by the Insurance Research Council, 13.8% of drivers in the United States are uninsured, and a much higher percentage are underinsured.
Whether you are ever the victim or the cause of an accident, it is worth reviewing your insurance policies regularly to make sure you are protected from paying tens of thousands of dollars in unforeseen costs.
Massachusetts Auto Insurance Coverage
In Massachusetts, you are required to carry the minimum of UM (uninsured) and UIM (underinsured) motorist coverage. Most people also carry PIP (personal injury protection) coverage, as listed below. We call the first two “20/40” for short.
- $20,000/$40,000 (per person/per occurrence) Bodily Injury Liability to others
- $20,000/$40,000 (per person/per occurrence) Uninsured / Underinsured (UM/UIM)
- $5,000 Property Damage Liability to others
- $8,000 No-Fault Personal Injury Protection (PIP) (Can be waived)
Massachusetts is a “no-fault” state, meaning your insurer will not make you prove who was at fault before you can receive compensation for initial medical expenses and some lost wages, but it will usually be limited to $8,000. Responsibility for other costs, including damage to your car, still lies first with the at-fault driver’s insurance.
Why is UM / UIM coverage so important?
Let’s say you are involved in an accident that is not your fault and you have damages, including pain and suffering, that total $70,000.
If the person who hit you only has the minimum 20/40 coverage, and you purchased additional underinsurance coverage with a limit of $50,000, the at-fault driver’s liability coverage would pay you the policy limit of $20,000, and your UM coverage would pay the difference between what the other driver’s insurance paid and your own policy limit ($30,000).
If the other driver has no insurance because he forgot to pay his premium, the car was stolen, or the accident involved a hit-and-run driver, your UIM coverage would pay the entire limits of your policy (in this case, $50,000) to you.
Buying Auto Insurance Online
When you are purchasing insurance of any kind, it is always a good idea to consult with a trusted professional for advice and explanation on the many coverages available on the market. We are finding that online sellers of auto insurance try to make premiums seem lower by eliminating some of the less profitable coverages like PIP and UM / UIM. We recommend that you do not waive your PIP coverage, and that you purchase UM / UIM coverage up to the amount of Bodily Injury Liability to Others coverage.
Underinsurance in Other Areas
It is also likely that you are underinsured beyond your auto insurance policy. Your homeowner’s policy includes a section for personal liability insurance, which would cover you if your lovable Rottweiler bit an obnoxious neighbor or if your child’s classmate fell off your trampoline or the edge of your swimming pool and was severely injured. You have the option of purchasing Excess Liability Insurance (covering anything after your auto or homeowner’s limit is used up), or Umbrella Insurance (covering an additional amount on top of all of your other policies and which has much broader coverage).