by Timothy A. Shollenberger, Esq.

This is the third in a series of articles designed to better inform you about the purchase of automobile insurance so that you can make the choices that are best for you. This article is not intended as a substitute for the advice of your insurance agent.

The following is a true story. While on his motorcycle, another driver failed to yield at a stop sign pulling into the path of Paul's motorcycle. As a result of the collision, both of Paul's legs were fractured, his pelvis shattered and his left hip broken. He was in intensive care for days. The wreck occurred on August 16, 2000 and as of September 26, 2000 he had still not been released from the local rehab center. A few days ago, he received a medical bill for $53,000 for his hospital stay. It is unlikely that he will be released from the rehab center until mid November. When he does get out, things will be very difficult because Paul lives alone. When I advised the other driver's insurance company about Paul's need to make a claim, they told me that the other driver only had $15,000 of bodily injury liability coverage, which is the coverage that a person buys if they cause an accident and injure someone while driving their car. I told Paul that all was not lost, but only if he had purchased an adequate amount of underinsured motorist coverage. Unfortunately for Paul, he had not purchased nearly enough. Sadly, I had to tell Paul that his case represented another “coverage tragedy.” Paul told me that if he had known how important underinsured motorist coverage was, he would never have bought such a low amount of coverage. (A coverage tragedy occurs when the amount of the loss is far greater than the amount of the coverage.)

Underinsured motorist coverage protects you, your family members who live with you, and those who occupy your car if the amount of bodily injury liability insurance is not enough to cover all of the losses suffered by vehicle causing the harm is not adequately insured by its owner for bodily injury.

Underinsured motorist coverage is optional, you can buy it or you can choose not to. It is relatively inexpensive, especially in comparison to the cost of collision coverage. Underinsured motorized coverage can be purchased in different amounts, but never in an amount greater than the amount of bodily injury liability coverage that you purchase on your own policy. (For example, if you only purchase $15,000 of bodily injury liability coverage, you can only purchase up to $15,000 in underinsured motorist coverage. If you purchase $100,000 in bodily injury liability coverage, then you can purchase as much as $100,000 in underinsured motorist coverage or lesser amounts all the way down to $15,000. If more than one vehicle is insured under the policy, then you must decide whether to stack the underinsured coverages that you have purchased - a concept that was covered in the first article in this series.)

As was noted above, the purpose of underinsured motorist coverage is to protect you, your family members, and the occupants of your vehicle if the other driver who causes the accident did not buy enough insurance to cover your bodily injury losses. Because Pennsylvanians are required to purchase only $15,000 in bodily injury liability insurance, it is easy to see why purchasing adequate underinsured motorist coverage is essential.

What does underinsured motorist coverage pay for?

1. Uncovered medical bills.
2. Unreimbursed lost wages.
3. Pain and suffering.
4. Effects of the injury on the quality of life (sometimes called loss of the pleasures of life).
5. Non covered but anticipated loss of future earnings.
6. Loss of future earnings capacity.
7. Noncovered but anticipated future medical costs.

If you are unclear as to how much underinsured motorist coverage you have, call us and we will be happy to review your policy with you. Reject this coverage at your peril. Rejecting underinsured motorist coverage is almost always a bad idea. Protect yourself and your family from becoming the victim of a “coverage tragedy.” You will be glad you did. My golden rule of advice on how much underinsured coverage to buy is this, “Buy as much underinsured coverage as you can afford.”

In our next article, we will talk about another important choice - whether to choose the full tort option or the limited tort option.