|Purchasing auto insurance can be a confusing ordeal, especially since each state has its own rules and laws about which type of insurance you will need. As overwhelming as this process might be, though, it is important and not something you can afford to put off. Driving can be very unpredictable. You never know when you might get into an accident. You need to purchase the right kind of car insurance to make sure you are completely covered in all circumstances.
You need liability coverage for a variety of situations, including uninsured motorist insurance (“UM”) and underinsured motorist insurance (“UIM”). These types of insurance are essential when the at-fault driver has no insurance, does not have enough insurance to cover your losses, or cannot be located, such as in a hit-and-run accident. Continue reading to see why purchasing UM and UIM coverage could benefit you in case you are ever in an auto accident in Michigan or anywhere else in the country.
What Is Uninsured Motorist Coverage?
The purpose of car insurance is to provide compensation for injuries and property damage that result from car accidents. Recovering certain kinds of damage requires making a claim against the driver who was at fault for the accident. Drivers often exchange insurance information after an accident for this reason. The at-fault driver’s insurance will, hopefully, provide compensation for injuries and property damage. This saves you the trouble of making a legal claim directly against the driver, who might not be able to cover the amount of your damages.
What happens, though, if you are involved in an accident with an uninsured driver? A report issued by the Insurance Research Council in 2021 states that about one-eighth of drivers on the road nationwide do not have car insurance coverage. The number of uninsured drivers is much higher in Michigan at one in four. You may still be able to go after the driver directly, but it is even more likely that they will not have the resources to pay your damages.
A similar problem may occur if you are in an accident with an underinsured driver. Even if their car insurance company pays the maximum amount allowed by the policy’s coverage limits, it might not be enough to provide you with full compensation.
UM and UIM coverage pays compensation for your injuries and other losses in an accident where you were not at fault, and the other driver either does not have insurance or does not have enough insurance. UM coverage may also pay for your damages when you cannot find the at-fault driver, especially a hit-and-run driver, after an accident. Instead of making a claim on another driver’s insurance, you can submit a claim to your own insurance provider. Damages that you can recover may include:
Are You Required to Have Uninsured or Underinsured Coverage in Michigan?
While some states might require drivers to carry UM and UIM insurance coverage, Michigan does not. This type of coverage is optional, but it is advisable as a way to protect yourself against medical expenses and other costs that may result from an auto accident.
Michigan’s no-fault statute requires you to carry an auto policy that includes personal injury protection (PIP). If you are involved in an accident, your PIP coverage will provide compensation to you without regard to who was at fault in the accident. This type of coverage will only cover some of your damages, however, such as medical bills, lost wages, and other expenses.
To recover noneconomic damages like pain and suffering or mental anguish, you will need to make a claim against the driver who was at fault or their insurance provider. Considering that, in Michigan, there is about a one-in-four chance that the other driver involved in your accident does not have insurance, UM and UIM insurance are a good investment to protect yourself.
How Many Different Types of Uninsured Coverage Are There in Michigan?
Two types of uninsured motorist coverage are available:
Similar types of coverage are available with UIM:
Many automobile insurance policies will allow you to purchase some or all of these types of coverage.
What is the Difference Between Uninsured and Underinsured Insurance?
While uninsured and underinsured motorist coverage are similar in some ways, they serve different purposes. UM covers you when the at-fault driver has failed altogether to fulfill their legal obligation to carry auto insurance. UIM provides compensation when that driver has insurance that will not pay enough to cover all of your damages.
UM provides compensation when the driver who was at fault in the accident has no insurance coverage at all. As mentioned above, an estimated one in eight drivers on U.S. roads do not have auto insurance despite legal requirements. The percentage of uninsured drivers on Michigan roads could be twice as high.
Laws in every state require drivers to carry auto insurance with minimum limits for coverage to ensure that people who have suffered injuries and property damage may receive compensation. Michigan requires drivers to maintain insurance with coverage limits of at least $20,000 per person for bodily injury claims and $10,000 for property damage.
Driving without insurance coverage is a misdemeanor offense in Michigan. Penalties for a single offense may include a fine of $200 to $500 and up to one year in jail. A court may suspend a person’s driver’s license for thirty days or until they can present proof of auto insurance coverage.
In one sense, car insurance benefits both the people who have suffered injuries in accidents and the drivers who caused those accidents. An injured person can make a claim against the driver’s insurance company to recover damages. The insurance company must abide by various legal and contractual requirements. With insurance coverage, the driver’s only expense consists of the premiums they pay to their insurer. Without insurance coverage, the injured person might have no choice but to pursue the driver directly through civil litigation, potentially subjecting the driver to far greater costs.
UM coverage gives the injured person more options besides litigation. It can provide the same kind of coverage that the at-fault driver’s liability coverage would provide had they fulfilled their legal obligation to carry auto insurance.
In order to recover damages through UM insurance coverage, you must demonstrate that:
You must comply with your insurance company’s claim requirements, which typically means you give them prompt notice about the accident. Michigan law sets a three-year deadline for filing a personal injury lawsuit against an at-fault driver, so you want the insurance claim process to be underway long before that. Be careful about various clauses that might be in your policy that could allow your insurance company to reduce the amount of compensation they must pay you. An auto accident attorney with experience handling insurance claims can help you through this process. Talk to them before you talk to anyone from the insurance company.
UIM pays when the at-fault driver’s car insurance policy limits are not enough to compensate you for your injuries and damages. In this situation, the at-fault driver has met their legal duty to carry insurance, but the policy limits are not enough to compensate the injured person.
Each state requires drivers to carry insurance with minimum policy limits. These limits define the maximum amount that an insurance company is obligated to pay. The minimum amount of coverage required by most states is relatively small and is often not enough to cover damages in car accidents that cause anything beyond fairly minor injuries.
Auto insurance coverage typically includes two limits on liability, a “per person” limit and a “per accident” limit. Insurance companies often express these with two numbers, such as “50/100.” A policy with those numbers would have policy limits of $50,000 per person and $100,000 per accident. The minimum requirement in Michigan is 20/40. While this amount of insurance can cover many types of injuries that result from auto accidents, it is possible that it will not be enough for serious injuries.
Suppose you and two other people suffer injuries in a car accident. The driver who is at fault has a 50/100 policy. While any one of the three injured people could recover up to $50,000, the three of you could not each recover that amount since the total amount that the driver’s insurance company will pay will not exceed $100,000. If all three of you have damages that exceed one-third of the total per-accident limit, or $33,333, it is possible that none of you would be able to recover all of your damages from the driver’s policy.
UIM coverage would allow you to recover the remainder of your damages from your own insurance company. Suppose that, in the above example, your total damages are $75,000. Regardless of the amount of the other two injured people’s damages, the at-fault driver’s insurance will cap your damages at $50,000, leaving you with $25,000 unpaid. If the other two injured people’s injuries are similar to yours, the total amount of your claims could quickly exceed the policy’s per-accident limit. Your own UIM coverage will hopefully allow you to recover the damages left unpaid by the at-fault driver’s insurance.
What Will Uninsured Coverage Cover in Michigan?
UM and UIM insurance coverage fills in some significant gaps left by other types of coverage. PIP coverage covers medical expenses and other out-of-pocket costs, as well as other direct financial losses like lost wages due to the inability to work after an accident. Collision insurance covers damage to your vehicle. These are not the only damages you can incur because of an accident, though. Some types of damages, known as non-economic damages, involve losses that are not as easy to quantify. To recover non-economic damages, you must make a claim on the at-fault driver’s insurance or your own UM coverage. This type of coverage may also allow you to recover “excess” benefits that your no-fault PIP will not cover because of your own policy limits.
Noneconomic damages include injuries that persist after you have completed your medical treatment, or that defy treatment altogether. Establishing the amount of economic damages is often as simple as submitting medical bills, evidence of time missed from work, and similar documents. Determining the amount of noneconomic damages is much more subjective. An experienced auto accident attorney can help you understand how non-economic damages work.
Examples of non-economic damages that an injured person may claim include:
As this list makes clear, non-economic damages are not limited to the actual treatment of physical injuries. They also include the mental and emotional impact of the accident itself, the injuries that resulted, and the process of recovering.
An injured person’s loved ones may also be able to claim non-economic damages in some situations. A claim for loss of consortium, for example, compensates an injured or deceased person’s partner for the loss of their companionship and intimacy.
Excess PIP Damages
Your PIP coverage will have its own policy limits, including limits on the amount your insurance company will pay per person and per accident. If your total economic damages, particularly medical expenses, exceed your policy’s limits, you might be able to make a claim on the at-fault driver’s insurance to recover the “excess” damages that your PIP will not cover.
This assumes, of course, that the other driver has sufficient auto insurance coverage. UM and UIM can cover these damages in the event that the other driver is uninsured or does not have enough insurance coverage for your excess damages.
How Much Uninsured Motorist Coverage Do I Need in Michigan?
As mentioned earlier, UM and UIM coverage is not required by Michigan law. It is a very good idea, though, in order to be reasonably certain that you can obtain full compensation for your injuries if you or a loved one suffers injuries in an accident caused by another driver’s negligence. More than twenty-five percent of Michigan drivers do not have insurance.
In addition to that twenty-five percent, many insured drivers might not have enough insurance coverage to provide you with sufficient compensation, especially if they only carry the minimum amount of insurance required by state law. UM and UIM coverage are a relatively small additional cost to add to your existing car insurance premiums.
Many auto insurance providers offer UM and UIM coverage with policy limits that go as high as 500,000/1,000,000, if not higher. This amount of coverage would pay up to $500,000 per person and $1 million per accident, amounts that are considerably greater than the minimum coverage required by Michigan law.
Purchasing insurance with limits that exceed the amount most Michigan drivers have can be important for UIM coverage in particular since the purpose is to cover the gap between the other driver’s policy limits and the amount of your damages. If your UIM policy limits are the same as the other driver’s general liability limits, your UIM coverage will not help you.
If you have a reasonably clear driving record without a history of accident claims, upgrading your UM and UIM coverage to these limits should not increase your total auto insurance bill by very much. It could be a very worthwhile investment considering how many drivers on Michigan roads are either unable or unwilling to maintain sufficient insurance coverage.
Do You Need Uninsured Coverage if You Have Health Insurance?
Yes, you should get UM and UIM coverage even if you have health insurance. Health insurance and UM/UIM coverage serve different purposes. The main purpose of UM and UIM in Michigan is not to pay your medical bills, but to make sure you can obtain compensation for pain and suffering and other non-economic damages. Health insurance is there to cover a wide range of medical expenses and needs.
You can recover compensation for medical expenses that are directly related to an accident from your PIP coverage. You might be able to recover “excess” medical expenses through UM coverage. What you do not want to do is rely solely on your health insurance to pay for medical expenses resulting from the accident. Your health insurance policy might have its own maximum coverage limits. The medical expenses associated with the accident can quickly wipe out your available health insurance coverage for the entire year, leaving you with no coverage for any other medical needs, expected or unexpected.
It’s Always Best to Be Prepared.
Steven and Jared Matz are dedicated and compassionate auto accident lawyers with years of experience helping accident victims and their loved ones throughout Michigan. They have recovered millions of dollars in damages for motor vehicle accident injuries through settlements and awards. Contact the firm today online or by phone at 1-866-22Not33 (1-866-226-6833) to schedule a free consultation with a skilled and knowledgeable Michigan car accident lawyer.