What You Didn’t Know About Uninsured Motorist Coverage

Uninsured motorist coverage is an often misunderstood auto insurance coverage and is far too often declined by the policyholder, but it does a lot more than most clients are aware. While uninsured motorist coverage is typically associated with an accident involving two or more cars, the coverage often applies when an uninsured motorist hits a bicyclist or a pedestrian.

Why the state minimum requirement is not enough

While California has a law that mandates that all drivers of motor vehicles maintain certain minimum limits of auto insurance coverage, also known as the financial responsibility law, there remains a large amount of irresponsible motorists on the road. As other motorists, cyclists and pedestrians are involved in accidents with these individuals they are at risk of not having a resource to recover their damages for medical expenses, lost wages, or pain and suffering after such an accident.

Does uninsured motorist coverage apply if you are not in a car?

This is the part most people do not expect. Uninsured motorist bodily injury coverage follows the insured person rather than only the insured car, so it can respond when a household member is struck while walking or cycling. National pedestrian injury and fatality counts are published each year by the National Highway Traffic Safety Administration. Those counts change year to year, so the current release is the figure to rely on rather than any number quoted in an article.

What happens if you are hit while walking

So what if you’re a pedestrian injured by someone who is driving without insurance? You may have your own medical coverage but you’ll have to pay the deductible, co-pays, hospital bills, and possibly use up your vacation time and savings to cover lost wages. Worst-case scenario, what if you or a loved one is killed by an uninsured driver while walking? If you carry uninsured/under-insured motorist coverage for your own vehicle, your policy may cover you even if you’re on foot when the accident happens.

What uninsured motorist coverage does

The need to insure against such an instance can be resolved by maintaining uninsured/under-insured motorist coverage on your California auto insurance policy. Uninsured motorist coverage offers protection in the event that an at fault driver that does not have any auto insurance, or an insufficient amount of auto insurance, causes vehicular bodily injury to another party that is insured under the uninsured motorist coverage.

There are various exemptions in the law, but in the vast majority of everyday situations, if you have UM (Uninsured Motorist) and UIM (Under Insured Motorist) coverage, the coverage is built to respond whether you are driving your own car, walking, or riding a bicycle. The exclusions in your own policy decide the edges of that, which is why the policy language matters more than a general description.

Who else in your household is covered

With UM/UIM protection, you also protect all of your family members living in your household, in the event they are similarly injured while a pedestrian or riding a bike. There is a limitation in the law as to relatives and friends you might be with at the time of such an accident. If you are accompanied by a friend or non-household relative, the UM and UIM coverage only applies if the accident happened while your friend was in, on, entering into or getting out of an insured motor vehicle.

As an example, assume you have UM coverage and you and your wife are struck by an uninsured motorist while riding your bikes together. You are both covered under the UM portion of your auto insurance policy. But if you are riding with your buddy and the same accident happens, only you can make a claim under your policy. Hopefully your buddy has his own UM coverage.

How under-insured motorist coverage works

Let us look a little further at how UIM coverage works. With Under Insured Motorist coverage, you are typically protecting yourself against the negligent driver who has chosen to take out only the California minimum of $30,000 per person and $60,000 per accident. UIM coverage only kicks in once you make a claim and obtain the negligent driver’s $30,000 of coverage. If you have $60,000 of UIM coverage, and if the nature and extent of your injuries justifies it, your claim against your own carrier is for $30,000 (that is, you are entitled to the $30,000 from the under-insured driver and $30,000 from your own policy for a total of $60,000). In the case of an under-insured driver, uninsured/under-insured motorist coverage helps compensate for the difference between what the at-fault driver’s policy will cover and the reality of what your damages actually are.

Can you decline uninsured motorist coverage in California?

Only in writing. California requires the insurer to offer uninsured and underinsured motorist coverage, and a policyholder who does not want it has to sign a waiver form recording that it was offered and turned down. That makes this one of the few coverages where the paperwork itself is worth locating. If you do not remember declining it, the declarations page will show whether it is there, and the file will show whether a waiver was signed. The California Department of Insurance sets out the offer and waiver requirement in its consumer guide to automobile insurance.

What about damage to your car, rather than injuries?

That is a separate coverage and it works differently. Uninsured motorist property damage pays toward repairing your vehicle after an at-fault uninsured driver hits it, and in California it is capped at the car’s actual cash value or $3,500, whichever is less. Two conditions come with it. The uninsured driver has to be identified, so it does not answer a hit and run where nobody is traced. And it generally sits as an alternative to collision coverage rather than alongside it, which is why it tends to suit drivers who do not carry collision at all.

The coverage almost nobody asks for by name

A collision deductible waiver pays your collision deductible when an at-fault uninsured driver damages your car. It exists precisely because the uninsured driver is not going to reimburse it. The same identification condition applies here, because the statute attaches it to both forms of this coverage. So where the driver is never traced, the waiver does not respond either, and the collision deductible stays with you even though the crash was not your fault. It is easy to miss on a quote sheet, because it is a line rather than a headline. Whether your policy carries it, and what it costs to add, is a question for your own declarations page.

What happens if you and your insurer disagree?

A dispute here is not handled the way a liability claim against another driver would be. Insurance Code section 11580.2(f) requires the policy to provide that two questions are settled by agreement or, failing that, by arbitration before a single neutral arbitrator. Those questions are whether you are legally entitled to recover, and if so how much. Courts have read that narrowly: those two questions go to arbitration and other issues, including any bad faith allegation, stay with the court.

Is there a deadline on an uninsured motorist claim?

Yes, and it is shorter than people expect. Section 11580.2(i) provides that no cause of action accrues under an uninsured motorist provision unless one of the steps the statute lists has been taken within two years of the date of the accident. Filing suit against the uninsured motorist is one of them. Concluding an agreement with your insurer on the amount due is another. Waiting for a claim to resolve itself is not.

These are the mechanics the statute sets for the coverage. Whether a particular step has been taken in time, and what follows if it has not, is a question for an attorney rather than for an agency. Statutory provisions are amended from time to time and the current text is published by the California Legislature.

Why your limits matter more than most drivers realize

UM and UIM limits are often set at the state minimum and left there, because the coverage is bought in the same moment as everything else and rarely revisited. The limit sits on your declarations page next to your liability limit. Whether the two should match is a fair question to put at a review, and the answer turns on what you would be left carrying yourself if the other driver had nothing. Where the other driver is never identified at all, the coverages that respond are different again, which is covered in hit and run accidents and your car insurance.

Uninsured motorist limits are chosen, not assigned, and the figure worth carrying is the one that answers what you would be left with if the other driver had nothing. Request a quote and we will show you what the limits cost.

Disclaimer

This article is provided by Schneiderman Insurance Agency for general informational purposes only. It is not legal, tax, financial, claims, or coverage advice. We are licensed insurance professionals, not attorneys, accountants, or financial advisors, and nothing here should be relied on as a substitute for advice from a qualified professional in those fields. This content is general in nature and is not a review of, or a recommendation for, any individual reader’s specific insurance needs, policies, or circumstances. Insurance coverage depends entirely on the specific terms, conditions, endorsements, exclusions, limits, underwriting eligibility, carrier, and facts of each situation, and the actual policy language always controls. We do not guarantee any coverage, pricing, eligibility, underwriting approval, or claim outcome. Reading this article does not create an agent-client relationship. To understand how these issues apply to your situation, please review your own policy and speak with a licensed insurance professional, and consult legal, tax, or financial advisors where appropriate.