Is uninsured/underinsured motorist coverage really necessary in a no-fault state (Florida, in my case)?
I’m about to renew my policy and was thinking about dropping my UM coverage to save some money. I recently added another vehicle to the policy and it has nearly doubled my premium.
It seems to me that if I was involved in an accident with an uninsured motorist, the insurance company would pay my claim, and it would be their responsibility to collect from the other party. Is that correct?
My FL No-Fault knowledge is a little rusty but as I recall, No-Fault has a low limit of coverage usually $10,000. It pays a portion of your medical bills and lost wages until the coverage limit. While this is fine for the usual fender bender if you’re really hurt this is peanuts. Anything above $10,000 and I think you’re allowed to file suit. So somebody whacks you in the parking lot you’ll likely be fine with $10,000 in No Fault. An uninsured driver or a driver with say $25,000 in liability limits, blows a red light and sends you to the hospital, you’re in serious financial trouble.
All the above may be moot because, I think UM/UIM coverage is required by law, very likely for the above reasons. Besides it’s a rather low cost coverage. By droping it you save maybe $100 a year.
What Jimson_Jim said was pretty accurate for my state. Without UM, your insurer is only liable for the first $10,000 of medical bills and lost wages. $10,000 would pretty much cover an extended trip to the ER and a few X-Rays anymore.
Also, there are a surprising number of people who are uninsured. Kind of scary.
You should also check to see how much of that premium is paying for the UM coverage. It shouldn’t be a large portion of the total premium. So, if you dropped it you’d would be losing fairly necessary but relatively cheap coverage.
Nope. If no-fault applies to a particular accident, then there is no “collecting from the other party”. How could there be? That requires a determination of fault.
As others have noted, however, even in a so-called “no fault” state, sometimes no-fault doesn’t apply. For serious accidents, you still may need to sue the other party. If they can’t pay, and if you have UM/UIM, then your insurer will pay. If you don’t care about that, you can drop the coverage–if Florida allows.
Mmmm, not in my state. The term “No-Fault” is a little misleading, perhaps. Basically it means that everyone is responsible for insurance against the first $10,000 of “special damages” (i.e. medical bills and lost wages) and therefore there is not tort liability (i.e. “fault”) for those causes of action. However, for everything over 10K or for property damages, tort liability (fault) still exists and always has.
No-fault was designed in the 70s to attempt to reduce litigation and claims administration costs. 30 years ago, $10,000 went a lot further and covered a lot more medical costs. These days, pretty much any accident with any bodily injury exceeds no-fault limitations and thus the “fault” system becomes available.
Plus, no-fault never applied to property damages. So there can still be a question about who is responsible for fixing your vehicle that is determined according to fault principles.
Bottom line, it sucks to be hit by an uninsured motorist, even in a no-fault state.
Right, that’s why I say, “if no-fault applies to a particular accident”. Often, even in no-fault states, it doesn’t.
The point I’m trying to make is, the OP says, “I have no-fault; I don’t need UM because the insurer will pay me and go after the other party”. But it’s precisely in no-fault situations where the insurer doesn’t do that; they can’t subrogate against the other party without a determination of fault.
It’s not required in Florida, you can reject it. If you select UM coverage, FL law requires that the limits equal the Bodily Injury limits of the policy, unless you select lower limits (or reject UM coverage entirely). My BI limits are 100/200, and the UM limits I selected are 25/50. The UM coverage costs $160/yr for both vehicles.
Scary, indeed. I think I read somewhere that Florida has the highest percentage of uninsured motorists of any state in the U.S.
That’s what I was trying to determine - if UM is redundant in a no-fault state.
The explanation given to me by my insurance company was hard to understand. It would be nice if they could explain it in simple layman’s terms easily understood by the average Joe - such as myself. Insurance gives me a headache.
Sounds like the UM coverage is worth keeping - thanks all for your replies.
Granted, you can indeed sue someone for damages they cause you, and in a no fault state this may seem like unnecessary coverage. However, what if the person who hits you has no assets to take in court? What if they do have assets but they have a lawyer who manages to tie the whole thing up in court for years? Beyond that, what if they only have state minimum liability and they cause you 150k in medical bills? Do you really want to chance being broke and homeless because of how long it can take you to get your money in court, assuming that the person who caused the accident has money to give? UMBI coverage generally acts as uninsured/UNDERinsured motorist coverage. I am a property and casualty insurance agent and I have uninsured motorist coverage on my policy. I also have incredibly high levels of liability so if I crash into someone and send a mother and her 3 children to the hospital my levels of coverage should be enough to keep me from being in the poorhouse for the rest of my life.
It is really a matter of priorities. If you just got laid off and need the money for food, I can see removing that coverage for a little while while you find another job. If you are just debating whether or not that extra 100 bucks a year should be used on DVD’s or acupuncture for your sharpei I would say getting rid of that coverage would be the dumbest thing you could do.
I agree, pbbth - I’m willing to pay the higher premium, but only if the coverage is really necessary and not redundant. My problem was that I had heard so many people (who are as ignorant as I am regarding insurance, apparently) say that no-fault would be sufficient and that UM coverage was a waste of money. After learning more about how no-fault works, it makes sense to me now. One thing that I was not aware of was that UM does not cover property damage. I now see the light, and I intend to increase my UM limits.
It wasn’t a matter of financial distress, it’s just that I’m a very frugal person and would rather invest my money for the future than waste it on unnecessary insurance coverage. 