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How Having Inadequate Coverage in Uninsured / Underinsured Insurance Can Leave You Out in the Cold

How Having Inadequate Coverage in Uninsured / Underinsured Insurance Can Leave You Out in the Cold

In my practice as a personal injury attorney, I sometimes have the unpleasant task of explaining to clients why they are not being covered by their insurance company’s uninsured / under-insured policy despite their having extensive injuries and the other party being at fault. In this article, I explain why.

California law only requires drivers to have liability insurance — which means that your insurance company would have to pay the other side’s damages, not yours, if you are at fault. Because most drivers are worried about paying the minimum amount of premiums they could pay, they only obtain liability coverage. However, they are left at a loss should they be involved in accident where the other party is at fault and does not have sufficient liability insurance.

Therefore, it is important that drivers obtain full coverage, which includes policies of uninsured motorist, under-insured motorist, or both.

An uninsured motorist policy pays your expenses when the other side is uninsured (as in the case of a hit-and-run driver), up to the policy limit.

An under-insured motorist policy pays the remainder of your policy when the other side’s policy limit is inadequate to pay for your injuries, but again up to the policy limit.

And this is where having inadequate coverage can leave you out in the cold despite the other guy being at fault and your injuries being extensive.

Imagine three drivers — Bert Ordinary (who only buys liability coverage), Charlie Prudent (who buys full coverage with an uninsured/under-insured limit of $15,000.), and Edward Extraordinary (who buys full coverage with an uninsured/under-insured limit of $100,000.)

Each of the above drivers are rear-ended by a truck in separate car accidents, suffering $25,000 in medical expenses and say, $25,000 in pain and suffering, for a total of approximately $50,000 in damages. The other party (truck driver) in all these accidents was completely at fault, but only has a limit of $15,000.00 in liability coverage.

Here is the maximum of how much each driver will likely be compensated:

  1. Bert Ordinary can only recover $15,000.00 from the other side, which is the limits of the other truck driver’s liability coverage, but nothing more.
  2. Charlie Prudent may get paid $15,000.00 from the other side. But because the limits of his own uninsured motorist policy is $15,000.00, he gets nothing from his own insurance, despite paying premiums for it.
  3. Edward Extraordinary, on the other hand, will recover (1) $15,000 from the other side’s insurance, and (2) he can get the rest of his damages ($85,000) form his own insurance company.

In the above examples, only Edward Extraordinary got what he paid for: he was careful enough to buy a good uninsured/under-insured policy, with ample room for coverage.

Unfortunately, Bert Ordinary does not have uninsured / under-insured coverage, so he can only recover from the other driver’s insurance for $15,000, which is not much when considering his own losses.

Most notably, the person who didn’t get what he paid for was Charlie Prudent– despite paying premiums month after month, he didn’t get fully compensated because of the limits of his own under-insured insurance policy.

The above circumstances highlight the importance of obtaining an auto insurance coverage with sufficient policy limits that will best protect yourself in the event of an accident (G-D Forbid).

By:  Eldad M. Younessi, Esq.

[Eldad (aka “Eli”) is a passionate personal injury attorney. Eldad is very emphatic with his clients and relentlessly pursues the best outcomes for their accidents. He is an associate at Saidian & Saidian, PLC and can be reached directly at (213) 222-8564.]

Disclaimer:  Please note that any information provided, and/or other legal information presented, on this post is not intended to be legal advice.  The information on this post is merely for informative use based on my experience in handling auto accidents.  You should consult an attorney for advice regarding your personal matter.