Most readers will mumble to themselves “What in the world is Uninsured Motorist Coverage?” (or Underinsured Motorist Coverage) and “Why is it so important?”

Let me explain…

In simple terms, uninsured motorist coverage, or underinsured motorist coverage (“UM/UIM”), is insurance, that you, the auto owner, carry which pays for your injuries if the driver who hit you is not insured or has minimal insurance coverage.

Let’s start from the beginning.

To operate a vehicle in Colorado, it is required by law, that automobile owners carry liability insurance. Liability insurance covers property damage/and or injuries to another party who are not the at-fault driver. In theory, the concept is good, but what most people don’t realize is that although you can recover, the most you can recover (if the at-fault driver has the minimum state-required insurance) individually is $25,000.00. The state-required insurance is referred to as 25/50. This means that a person can recover up to $25,000.00 per person for injuries with a maximum recovery of $50,000.00 per accident. Well, how does this translate into the importance of carrying UM/UIM?

Let me explain by using an example.

If Driver A runs a red-light hitting Driver B and Driver B has a broken arm, herniated disk, whiplash, and a traumatic brain injury, the most Driver B can recover under Driver A’s insurance policy is $25,000.00. As we know $25,000.00 is completely insufficient to compensate Driver B for their injuries. In fact, the $25,000.00 would most likely not even cover one hospital overnight, not to mention ongoing care, or compensate Driver B for a permanent life-long injury such as a brain injury. However, if Driver B has UM/UIM for 250/500, now Driver B can recover up to $250,000.00 from their own policy. (UM/UIM can be obtained for 25/50, 50/100, 250/500 500/500, or higher. We are only using 250/500 in this example.)

You can see from this example, that without UM/UIM coverage, Driver B would be at a significant financial disadvantage.

Without, UM/ UIM, Driver B would only be able to recover up to $25,000.00 under Driver A’s policy. But, if Driver B had UM/UIM, Driver B could recover $25,000.00 from Driver A, and up to $250,000.00 under Driver B’s own policy; thereby, providing a total recovery of $300,000.00. By securing a UM/UIM policy, Driver B has successfully protected him or herself from financial ruin.

By Tara Rismani

Tara Rismani practices personal injury and insurance recovery law at the Contiguglia Law Firm.

Check out our other articles on personal injury and insurance needs:

8 Mistakes Personal Injury Victims Make with Insurance

Why You Should Hire a Personal Injury Lawyer When Dealing with an Insurance Company

10 Personal Injury Law Terms and Definitions You Should Know