Uninsured and Under-insured Motorist Protection (UM)
It is very important to have this coverage! There are many motorist in California that do not have insurance or have the bare minimum.
Although the law says that you need to have a valid driver's license and proof of insurance, many California residents do not have either. The fines are pretty steep if they violate the law, but many of those who do, never show up to court and pay their fines. Recently, many police forces in California now will not tow the vehicle away, enabling more and more drivers to drive without insurance. About 1 in 9 California Residents do not have insurance.
Can't I just sue the person?
Yes, you can sue the person and receive a Judgment in your favor. However, the HARD part is collecting on that Judgment. Chances are that if a person didn't have insurance, that person does not have a lot of money in the bank or own a home. They may have a job where you can garnish their wages, however many will work under the table to avoid paying.
Another way at-fault persons can avoid paying is through bankruptcy. Even if they own a home or have a job, if they qualify, they can file bankruptcy and the money that they owed you is completely wiped away. There are also bankruptcy laws that allow them to keep their stuff (home, cars etc) and still extinguish their debts.
Bottom line, you can have a Judgment for 1 million dollars but getting paid by the person can be very difficult and you should not rely on other people to be responsible and carry the appropriate amount of insurance.
So what is Uninsured/Underinsured Motorist Coverage?
These type benefits provide coverage to protect you and/or those who are passengers in your vehicle. Among other things, these benefits provide for payment of damages incurred as a result of an at-fault driver who has no liability insurance, a phantom driver, a hit-and-run driver, or a driver who fails to carry enough insurance to pay for your expenses.
Basically, when someone who should have paid, does not have insurance or enough insurance, your coverage will kick in to compensate you for the injuries you sustained.
Uninsured Motorist Coverage
This type insurance is optional and offered by your automobile insurance carrier. If you are involved in a hit and run accident or collision with someone who does not have insurance, then damages can be paid under your own uninsured motorist coverage.
What is a good amount of coverage?
This is up to you and what you can reasonably afford. You are not required to have this type of insurance in California. Contact your insurance agent to discuss how much your coverage may cost.
It works like this: If you purchased uninsured benefits in the amount $30,000, and you were injured by an uninsured driver, you can collect only up to $30,000 from your own insurance company to pay for damages. So lets say you were paralyzed or broke a leg, you will only be entitled to collect $30,000 from your insurance company under your uninsured policy. We recommend you minimally carry $100,000 per individual/$300,000 per incident in coverage. In many cases, if you can afford it, you should obtain even higher coverage.
Under-insured Motorist Coverage
So this kicks in when the person who caused the collsion does not have enough insurance to adequately compensate you for your injuries. For example, if the person responsible has liability limits of only $15,000, the most you can claim from their insurance carrier is $15,000.00 per person. If you sustained serious injuries and incurred significant medical expenses, the value of your case could well exceed $15,000.00. If you have $100,000/$300,000 uninsured coverage, after you collect $15,000.00 from the at-fault party, you will be able to pursue an additional $85,000.00 from you own under-insured motorist insurance.
Note, you cannot collect the $15,000.00 and then the full $100,000 to make $115,000.00. The maximum you can recover is $100,000 in this example.