What is Uninsured Motorist Coverage?
What is Uninsured Motorist Coverage? Uninsured motorist coverage is sometimes referred to as “insurance against lack of insurance.” For example, imagine you are injured in a wreck and your damages are $100,000. What if the at-fault driver only has $25,000 of liability coverage? What about the other $75,000? If you purchased enough uninsured motorist coverage from your automobile insurer, you can look to your own insurance company to make up the difference.
So how does this work in Georgia? For automobile insurance policies issued, delivered or renewed on or after January 1, 2009, the insurer must offer the insured “added on” or “reduced” underinsured motorist coverage. Georgia law does not require an owner of a vehicle to purchase uninsured motorist coverage but it does require the insurance company to offer the coverage. What is the difference in “added on” or “reduced” coverage?
“Added on” coverage provides coverage over and beyond the at-fault driver’s coverage. For example, suppose you are injured by a negligent driver who only has $25,000 of liability coverage. Further assume that you purchased “added on” uninsured motorist coverage with limits of $25,000 and your damages are $50,000? In this situation, there is enough available insurance to cover your damages! The at-fault driver’s insurance would pay the $25,000 of liability limits for the at-fault driver and your own insurance company would pay the remaining $25,000 for a total of $50,000.
What about “reduced” uninsured motorist coverage? Consider the same situation discussed in the preceding paragraph but assume you purchased “reduced” uninsured motorist coverage with limits of $25,000. Here, your UM coverage is worthless. Your insurance company, the uninsured motorist insurance company, would pay nothing because the amount of coverage available under your uninsured motorist policy would be reduced by the amount of coverage available from the at-fault driver’s liability policy. In other words, your $25,000 UM limits is reduced by the $25,000 available from the at-fault driver’s liability policy. Therefore, you would recover $25,000 from the at-fault party’s liability carrier and $0 from your insurance carrier.
The lesson here is simple: Always purchase “added on” uninsured motorist coverage.