Do You Need Uninsured / Underinsured Motorist Insurance?

Most motorists likely know very little about Uninsured/Underinsured Motorist (UM/UIM) automobile policies. Under Georgia law, these policies must be offered by the automobile insurance company to all Georgians. However, insurance companies seem to do a poor job of explaining their intended purpose and the significance of the corresponding coverage elections under these policies.

UM/UIM coverage can be helpful for both property damage and bodily injury claims. However, adding such a policy to your insurance plan is more expensive and people may determine that the extra cost is not worth the extra coverage.

Unfortunately, while UM/UIM motorist coverage isn’t commonly used, there are certain situations that could arise where not having this policy can have a lasting negative impact on your personal injury case and your health in general.

Quite simply, the purpose of these policies is to provide coverage in the event of a wreck where the at-fault driver has either no liability insurance (uninsured) or insufficient liability coverage (underinsured), meaning that the damages exceed the value of the liability policy limits. Either scenario can be more common than one may realize, leaving injured car wreck victims with insufficient funds to compensate them for their damages.

For the purpose of this article, our focus is on personal injury damages as opposed to property damage. These damages include necessary and reasonable medical expenses, lost wages, pain and suffering, loss of consortium, and diminished quality of life.

For example, what if you are rear-ended and the other driver doesn’t have insurance at the time? Or what if the injuries you sustained are so severe that you require extensive treatment, forcing you to accrue medical expenses that exceed their liability limits?

Sadly, both of these possibilities happen often enough that we need to have this conversation. When they do, you may need to consult an experienced Georgia car accident attorney to learn about other legal options for getting compensation from the at-fault driver.

Georgia Car Insurance Laws and Requirements

The state of Georgia doesn’t require drivers to have uninsured motorist (UM) or underinsured motorist (UIM) insurance coverage for a vehicle where there is no loan being paid off. These types of insurance offer additional protection for drivers in the event that they are victims of a car accident and the other driver either has no insurance or doesn’t have sufficient insurance.

Under Georgia law, all motorists are required to have liability coverage of no less than $25,000 per person and $50,000 per accident. These minimum coverage limits are set forth in Georgia’s UM statute (O.C.G.A. § 33-7-11) as follows:

(a)(1) No automobile liability policy or motor vehicle liability policy shall be issued or delivered in this state to the owner of such vehicle or shall be issued or delivered by any insurer licensed in this state upon any motor vehicle then principally garaged or principally used in this state unless it contains an endorsement or provisions undertaking to pay the insured damages for bodily injury, loss of consortium or death of an insured, or for injury to or destruction of property of an insured under the named insured’s policy sustained from the owner or operator of an uninsured motor vehicle, within limits exclusive of interests and costs which at the option of the insured shall be:

(A) Not less than $25,000.00 because of bodily injury to or death of one person in any one accident, and, subject to such limit for one person, $50,000.00 because of bodily injury to or death of two or more persons in any one accident, and $25,000.00 because of injury to or destruction of property; or

(B) Equal to the limits of liability because of bodily injury to or death of one person in any one accident and of two or more persons in any one accident, and because of injury to or destruction of property of the insured which is contained in the insured’s personal coverage in the automobile liability policy or motor vehicle liability policy issued by the insurer to the insured if those limits of liability exceed the limits of liability set forth in subparagraph (A) of this paragraph. In any event, the insured may affirmatively choose uninsured motorist limits in an amount less than the limits of liability.

By default, insurance companies must provide UM coverage in amounts no less than the liability limits of that same policy, unless the insured affirmatively chooses some lesser amount. This happens more frequently than you might suspect. In fact, you may have made such rejections without even realizing that you had done so.

Many of our clients have made such rejections during a coverage conversation with their insurance agent or other insurance representative where the significance of these elections was not explained or was explained quite poorly. Only later, and after finding themselves with inadequate coverage, did they learn of this. It is important that you do not find yourself in a similar situation.

Such elections that reject or reduce UM/UIM coverage must be in writing. However, once rejected or reduced, an insurance company has no obligation to reaffirm this coverage election in any supplemental or renewal policy.

Reasons Why You Should Get Uninsured/Underinsured Motorist Coverage

Rejecting UM/UIM coverage — or choosing reduced coverage — can create unintended situations with disastrous consequences. Here are a couple of reasons why we recommend adding UM/UIM coverage to your policy if you haven’t already.

First, it is not uncommon for there to be either no liability coverage or insufficient liability coverage as compared to the total sum of damages. It is an unfortunate reality that there are those who choose to ignore the law and drive without liability coverage. Other times, someone may truly believe they had coverage when in fact they did not. For instance, they may have forgotten to submit their premium payment, causing the policy to lapse.

Second, there may be valid policy exclusions effectively eliminating any liability coverage.  Exclusions are provisions written into the language of the policy itself that deny coverage to specific people or to certain situations. However, just because an insurance company chose to include an exclusion within the policy doesn’t mean that it’s valid and enforceable. Interpreting exclusions and determining their validity under Georgia law is often complicated and requires the skill of an experienced personal injury attorney.

If you encounter either of these coverage situations, you would necessarily need to turn to your UM/UIM coverage. And, if you chose to reject or reduce this coverage, you could be in a very unfortunate predicament.

Why UM/UIM Coverage Is Important

Here’s an all-too-common horror story that warns about the dangers of rejecting UM/UIM coverage.

In October 2016, our client, whom we’ll call Ms. Smith, was a passenger in a vehicle being driven by an acquaintance. The vehicle, which had several passengers, stopped in the parking lot of a gas station in downtown Atlanta. It was at that point that Ms. Smith exited the vehicle due to a dispute over where the vehicle was going.

After she exited, the driver got back into the vehicle to leave, accelerated quickly and struck Ms. Smith, running over her left foot. The driver then left the scene and eventually made her way home to Alabama — where she was ultimately arrested and brought back to Georgia on charges of aggravated assault.

Ms. Smith was transported to the local emergency room via ambulance. She was immediately diagnosed with a closed fracture of the left tibia and fibula. She was admitted to the hospital for surgery, and a closed reduction and splinting was performed.

Ms. Smith then spent 4 days at the hospital, undergoing physical therapy and was ultimately fitted for a 3D boot to wear while she continued recovering at home. After being released from the hospital, she participated in physical therapy for several months while weaning off the 3D boot, only to undergo more physical therapy to continue regaining strength in her leg. Ms. Smith’s total medical expenses for just the hospital stay, which included a few of the many sessions of physical therapy, totaled over $60,000.

During the course of her initial treatment, our law firm helped locate the responsible driver and determined that she had $25,000 in liability coverage, which is the minimum amount required by the state of Georgia. Since our client’s expenses already exceeded those limits, we didn’t need to wait for Ms. Smith to complete treatment. We were able to gather records and bills for just those 4 days.

At that point, a demand was sent to the liability insurance carrier to try and recoup some expenses for Ms. Smith. The liability carrier immediately tendered their limits, accepting liability and paying out $25,000. We then negotiated a lower price from the hospital as her 4-day stay was not fully covered by her health insurance. They originally wanted over $8,000 in deductibles and copays, but we were able to negotiate with them to accept $360 as full and final payment.

After paying the fees, expenses and outstanding total to the hospital, our client was able to put $15,536.53 in her pocket.

The typical course of action in a situation such as Ms. Smith’s is to first acquire the liability insurance carrier’s policy limits and then, if the client’s medical expenses are high enough, attempt to get more money from the uninsured/underinsured motorist policy. Once our firm acquired the at-fault driver’s policy limits, a second demand was drafted for our client’s UM/UIM motorist policy limits, which were also $25,000.

Unfortunately, Ms. Smith had declined UM coverage when establishing her policy. To ensure we did everything possible to confirm this, we requested a copy of the policy and the UM rejection page. In the state of Georgia, you must sign a form stating you have been offered and actively declined UM coverage by signing a rejection form; otherwise, you may be able to argue that you weren’t made fully aware of the potential dangers of not having uninsured/underinsured motorist coverage. Upon request, Ms. Smith’s insurance company quickly forwarded the policy and rejection form, so we were forced to tell her that the $15,536.53 she received was all she would be able to get.

Understandably, Ms. Smith was unhappy.

At that point in time, she was still treating for her injuries and was going to continue incurring more medical expenses. But now she was responsible for all treatment going forward. Our firm had the unfortunate task of explaining the above situation to her and she justifiably felt that she had been deceived by the insurance company.

Car Accident Scenario: How Uninsured Motorist Coverage Can Help

In addition, consider the following scenario.

Driver A is stopped in traffic and is rear-ended by Driver B. The impact from the wreck is significant and causes Driver A to feel immediate pain in her neck, back, and head. She is transported from the accident scene to the emergency room where X-rays are performed, along with CT scans showing no fractures, bone injuries, or any identifiable injury to the brain. Upon discharge, she is prescribed muscle relaxers and pain medication, and told to follow-up with her primary care provider and orthopedic physician if her symptoms worsen.

Over the next couple days, Driver A has persistent headaches and increased pain and stiffness in her neck and lower back. She seeks treatment with an orthopedic doctor. The orthopedic doctor does a physical exam and prescribes several sessions of physical therapy. In the meantime, her headaches remain persistent and intense. She seeks treatment with her primary care physician who diagnoses her with suspected mild traumatic brain injury and refers her to a neurologist who confirms this diagnosis. He advises her to rest and avoid any mentally challenging activities.

Over the next several weeks, Driver A’s headaches eventually subside, and her cognitive abilities return to normal. The same is true for her lower back pain. However, she continues to have persistent pain and stiffness in her neck. Her orthopedic physician orders an MRI that reveals a herniated disc. He explains to her that this is a permanent spinal injury that will likely require a lifetime of treatment and possibly surgery.

Over the next several months, Driver A continues to have treatment for her neck injury, to include physical therapy and injections. This treatment provides some relief, but it is only partial and temporary. Ultimately, her doctor performs surgery — a discectomy and spinal fusion.  While the surgery improves her condition compared to where she was after the wreck, it doesn’t return her to her pre-injury physical condition that she enjoyed before the wreck. Unfortunately, her current condition is permanent and will likely only get worse as she ages.

Let’s discuss her damages.

Driver A’s medical bills from the wreck are roughly $250,000, and she lost $15,000 in missed work wages. But, more significantly, she is left with a permanent physical deficit of her neck.  The surgery certainly helped, but her neck will never be the same.

What amount of money is enough to compensate for this — $350,000, $500,000, 1 million, 2 million?

The answer here is obviously highly subjective. But whatever amount that is, whether determined by you, through settlement with a mediator, or a jury, the insurance coverage limits will ultimately determine the compensation threshold.

Simply put:

If the total damages exceed the available policy limits (both liability and UM/UIM), the excess amount of damages will go uncompensated. Unfortunately, this can happen quite easily.

Now, let’s run through a few potential scenarios to show how compensation might play out in this example based on different policy limits and the interplay between liability coverage and UM/UIM coverage.

“Reduced” UM/UIM coverage

Say that Driver B, the at-fault driver, has a $250,000 liability policy and that Driver A has a UM policy of $250,000 that is reduced. “Reduced” is a term that means the UM policy limits are reduced by the amount of coverage available through all available liability policies. In this situation, since the at-fault driver has $250,000 in coverage, Driver A’s coverage is reduced by this same amount, effectively “zero-ing out” Driver A’s UM coverage and leaving only the liability policy limits for compensation.

However, let’s assume that Driver B has a state minimum $25,000 liability policy. The UM policy of $250,000 is “reduced” by $25,000, leaving $225,000 available for UM coverage, but nevertheless the same overall total of $250,000. So, in any case where the liability policy amount is less than or equal to the reduced UM policy amount, total coverage will never exceed the amount of the reduced UM policy.

And, once again, keep in mind, UM coverage is only available if the damages exceed the liability limits. Its purpose, after all, is to provide additional coverage above and beyond the liability limits. From this, you can see that there is substantial risk of having insufficient coverage with a reduced UM policy. While they are somewhat less expensive, the lower cost of a reduced UM policy may leave you with greater financial hardship in the event of a car wreck or other serious injury where there are significant damages.

“Add-On” UM/UIM coverage

Say that Driver B has a Georgia statutory minimum liability policy of $25,000 and Driver A has a statutory default “add-on” policy in the same amount of their own elected liability coverage — in this case $100,000. With a standard “add-on” policy, you add the UM/UIM coverage to the available liability policy limits, resulting in a total of $125,000 of available insurance coverage.

But if Driver A, just as Driver B, had elected a Georgia statutory minimum liability policy of $25,000 with matching “add-on” UM coverage in the same amount, the available insurance coverage would only be $50,000, which is significantly short of Driver A’s total damages. So, while Driver A was wise to choose “add-on” UM coverage, the coverage amount falls significantly short of the damages described in our car wreck scenario.

Here, even a $250,000 UM/UIM policy ($275,000 in total coverage after we “add-on” the $25,000 liability policy) is not enough as it barely covers the medical expenses and leaves most of the remaining damages uncompensated.

Why Do You Need Uninsured Motorist Insurance?

Hopefully, this discussion serves to illustrate how easily it can be to suffer extensive injury damages, possibly requiring a lifetime of care. When making insurance coverage elections, it is always important to be mindful of this reality and therefore ill-advised to reject UM/UIM coverage or elect “reduced” uninsured coverage. Either can leave you and your family in financial hardship with injuries that you cannot afford to properly treat.

And, while “add-on” UM coverage is always the wisest choice, the insurance election decision does not end there. You must also consider your policy’s limits. It’s important that you choose a policy that provides you and your family adequate protection in the event of a collision where the at-fault driver has either no liability coverage or insufficient coverage. The additional cost is an investment in you and your family’s safety, and it will afford you peace of mind. The alternative is a risky proposition exposing you and your family to significant potential physical, emotional, and financial hardship.

Most insurance companies don’t give tutorials or lectures on the importance of maintaining UM/UIM coverage on your vehicle. They simply ask if you want uninsured/underinsured motorist coverage. If you say “no,” they typically send you a form to sign establishing that they asked you but you denied coverage.

Sadly, many people aren’t aware of what it means to deny uninsured/underinsured motorist coverage. They see it simply as rejecting an unnecessary extra cost. What people need to understand is UM/UIM coverage is similar to health insurance coverage:

You may not use it often. However, there may come a day that you suddenly and immediately earn back all of what you paid because someone decides to run you over in a gas station parking lot and you need major surgery on your leg.

So, why do you need uninsured motorist insurance?

Because when that day comes, being prepared by making sure you have UM/UIM coverage on your auto insurance policy will be in your favor.

If you have any questions or have any other questions about why you need uninsured motorist insurance, call us at (866) 592-1296 or contact us online today for a free, no-obligation consultation with a Georgia car accident lawyer.