In a motor vehicle accident in Indiana, the driver who caused the accident is generally liable for the damage to the other driver’s vehicle, and for the medical costs, economic costs (such as lost wages), and emotional costs related to injuries to that driver and his or her passengers. Liability coverage provides the money to pay for this, up to the limits in the driver’s auto insurance policy. Unfortunately, almost 17 percent of drivers in Indiana lack this coverage, even though the law requires it. Many drivers who do have the coverage have low limits that would be insufficient to cover major injuries or multiple injuries. Who ends up paying? Read on to learn more.
This number of uninsured or underinsured drivers is expected to grow as economic pressures from the COVID-19 pandemic and its after-effects continue. Currently, insurers are providing refunds to customers who are driving less. They also are allowing customers to defer payment of premiums. Eventually, however, the deferred premiums will need to be paid; some customers will be unable to make these payments and will end up dropping their liability coverage or reducing its limits. This will result in more drivers who are uninsured or underinsured.
When you are in an accident caused by a driver who lacks sufficient liability insurance, you may end up having to pay for damages to your car and injuries out of your own pocket even though the accident was not your fault. This can be financially difficult, especially if you have been injured yourself and lose time from work.
What is UI and UIM?
UI stands for uninsured motorists; UIM stands for underinsured motorists. UI and UIM are coverages you add to your auto insurance that pays for your injuries and those of your passengers from accidents in which you were not at fault, but the other motorist lacked sufficient liability coverage. Indiana requires that all drivers have at least a low amount of UI and UIM; however, the more UI and UIM you carry, the less your personal assets will be at risk.
The Importance of Carrying Sufficient UI and UIM
Remember liability coverage provides money to cover injuries to the other driver and passengers. Suppose you and your family are in an accident caused by someone who has no liability coverage (an uninsured motorist). When you add up the cost of medical care and wages lost because of the injury, the total is $500,000. This doesn’t even include any compensation for pain and suffering or emotional trauma. If the other motorist has no liability coverage, he or she is also unlikely to be able to pay $500,000 out of pocket.
If you have a low amount of UI coverage, say, for example, $50,000, you would still end up paying $450,000. However, if you have UI coverage up to at least $500,000, you would owe nothing. Your insurance would provide all the payment.
While $500,000 sounds like a lot of money for injuries, that amount could be realistic in an accident with several passengers. A typical hospital stay is more than $10,000, and that doesn’t include major procedures. The average physical therapy visit in the United States is $174. When you also consider the wages lost during recovery, these expenses add up quickly.
Butler Insurance, in Fishers, is your independent insurance agency in Hamilton County and the surrounding areas. Contact us at 317-849-7121 for answers to your questions on UI, UIM, and all your insurance needs.