I had a client who was injured in a motor vehicle accident. He ended up having shoulder surgery as a result of the car accident. He lost time from work as a result of the accident. He lost wages as a result of the accident. He incurred extensive medical bills as a result of the accident. Obviously, he also incurred major pain and suffering and permanent loss of function.
The person who had rear ended my client’s vehicle had an insurance policy with a limit of $50,000.00. That means that the most my client could be compensated from that policy is $50,000.00. My client’s case was worth more than $50,000.00.
Initially, when I met with him, it appeared he had coverage through his own policy that would cover him if he were struck by a vehicle that had no insurance or he had been the victim of a hit and run. The coverage was $100,000.00 which meant that if he had been hit by an uninsured vehicle, he would be able to be compensated up to $100,000.00 from his own policy with no increase or consequences to his premium. Usually, when someone opts for $100,000.00 uninsurance coverage (the compulsory amount is $20,000.00), they also pay an optional premium for Underinsurance coverage in the same amount.
What is different about Underinsurance versus uninsurance coverage, if you pay the optional premium, is that if you are struck by a vehicle that has minimal insurance or less insurance coverage than your Underinsurance coverage, you can demand the difference between the offending vehicle’s insurance coverage and your Underinsurance coverage. For example, if you are struck by a vehicle that has $20,000.00 in coverage and you have $50,000.00 in Underinsurance coverage, you can pursue an additional $30,000.00 from your own policy with no premium repercussions.
Back to my client. He applied for his insurance coverage online. He had no guidance; and the insurance company which rhymes with Lie-co was not encouraging him to obtain the proper coverage. They were just promoting how cheap their policies are. You get what you pay for. Although he signed up for Uninsured coverage, he failed to sign up for Underinsurance coverage. He would have been better off being struck by a vehicle that fled the scene of the accident. Here’s the worst part. I went online to see how much it would cost to buy the optional Underinsurance coverage. It costs $50.00 for $100,000.00 in Underinsurance coverage. My client’s case was clearly worth more than $100,000.00. He received the $50,000.00 from the insurance company of the person who hit him. But, to save $50 on his premium, he lost out on an additional $50,000.00.
Moral of the story: Pay the premium for the optional Underinsurance. If you don’t, you may regret it later.