The Story of the Uninsured Driver

You might be wondering, how do I know if I have the right auto insurance coverage? Let me tell you a story about an accident to help explain what type of car insurance coverage is prudent for peace of mind protection. This story involves a driver getting into an accident with an uninsured motorist. To protect the names of the real people in this example let’s use the alias of Sally for the driver who was rear ended and not at fault, and Jimmy for the driver who rear ended Sally and was found to be at fault by a police report conducted at the scene of the accident.

When Sally was hit from behind she sustained serious injuries. She was able to utilize her own auto insurance policy to pay for medical costs because the state where the accident happened was a no fault state. Essentially, this means that almost every insurance policy must provide any drivers or passengers in the insured vehicle medical payments coverage up to $50,000. This coverage is commonly referred to personal injury protection, or PIP. A policyholder can purchase more PIP coverage above and beyond the standard $50K if they so choose. In Sally’s case, her policy only afforded her $50,000 of personal injury protection at the time.

After she exhausted her PIP coverage, she met with a lawyer about suing Jimmy for pain and suffering and making a claim on Jimmy’s policy, but Jimmy was driving uninsured at the time! Even still, Sally decided to sue Jimmy after all and go after his personal assets. After a lengthy court battle, Sally’s pain and suffering was valued at about $200,000 by a court of law and a judgement was issued against Jimmy. To Sally’s chagrin, Jimmy had no assets so his wages were set to be garnished whenever he got back to work (which wouldn’t be anytime soon)! Sally’s medical bills went far beyond the $50,000 that she received through her PIP coverage. Sally also did not have health insurance at the time and didn’t have a lot of money herself. So how was Sally supposed to pay for all of her bills? She certainly wasn’t going to wait around for Jimmy to get a job!

Well, insurance policies typically have another standard coverage called Supplemental Uninsured/Underinsured Motorists Liability (aka SUM coverage). At the time of the accident, Sally’s policy only had the minimum required SUM coverage, which is $25,000 per person and $50,000 per accident in her state. Basically, this coverage paid out $25,000 to Sally for her pain and suffering (which mainly went to her medical payment costs) but she was still on the short end of the stick for all the medical payment costs she had incurred. Could she have had more of this coverage? How does SUM coverage work?

Supplemental Uninsured/Underinsured Motorists Liability (SUM) coverage is auto insurance coverage that is mandatory on all car insurance policies in many states. The purpose of this coverage is to protect people who are either hit by a vehicle with a driver who has little to no insurance, or involved in a hit and run accident. In the example of Sally and Jimmy, Jimmy had no auto insurance at all. So, the SUM coverage on Sally’s policy is there to pay for her pain and suffering in the case that she is unable to collect from Jimmy’s insurance.

The ironic thing was that Sally had high bodily injury liability limits of $250k/$500k but they didn’t apply in this situation. For just a few dollars more she could have had increased her uninsured/underinsured motorist (SUM) coverage to match her bodily injury liability limits and she would have been able to pay for the cost of all her medical bills with the help of her own insurance carrier!

Let this story serve as a lesson. You should always make sure that your uninsured/underinsured motorists liability limit is increased to match your bodily injury liability limits if you can. As you can see, it would have been well worth it for Sally!