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How Much Uninsured Motorist Insurance Should I Have?

Certificate of Motor Insurance

By Jacob Regar

This very important question, “how much uninsured motorist insurance should I have,” deserves more attention than it usually receives. Short answer, get at least $100,000 UM coverage. $250,000 is better.

In California, when you purchase UM coverage you also get underinsured motorist coverage (“UIM”)—two types of coverage for the price of one. The policy limits apply to both UM and UIM and they cover individual incidents. So, if you get into an accident that was caused by another driver, who was uninsured, and you file a UM claim with your own insurer – and regardless of the outcome – your full policy limits are available in case you get into subsequent accidents.

UIM can be very important in personal injury cases. In fact, because so many drivers only maintain the required minimum liability insurance limits (i.e., $15,000 for a single accident victim/$30,000 for multiple victims), there is a real good chance that a driver who causes an accident will be underinsured.

When an insurance policy is too small it lacks the funds to provide reasonable compensation for a personal injury victim’s damages. I see this scenario in my line of work very regularly.

Also, in collisions that involve multiple vehicles, there is a good chance that the at-fault driver does not have insurance policy limits that are high enough to compensate all of the accident victims.

The function of underinsured motorist coverage is explained elsewhere in this site. It would probably be helpful to read up on the nuts and bolts of UM/UIM coverage.

In order to gain the right to make a UIM claim, you have to first prove that the insurance policy that covered the at-fault drive has been exhausted. And as is explained on the UM/UIM page linked-to above, the UIM coverage is measured by the difference between the at-fault driver’s insurance policy (that you must exhaust) and the UIM policy limits.

The good thing about purchasing higher UM/UIM limits is it frees up your choices relating to how aggressively you want to pursue your personal injury claim. If the at-fault driver is uninsured, then you can pursue a UM claim and fight all the way through arbitration against your insurance company to recover just compensation. If the at-fault driver is underinsured, you have good incentive to exhaust the other policy and move onto the available balance of your UIM limits.

With respect to your UM/UIM limits, bigger is better. This ensures that if your damages warrant a full scale attack against your insurer to recover fair compensation from your insurance policy, you will know that your policy contains enough funds to make you whole.