The Importance of Uninsured and Underinsured Motorist and Medical Payments Auto Insurance Coverage

Exchanging info after a car accidentWhether signing up for new auto insurance, adding a new vehicle to your policy, or renewing an existing policy of auto insurance, one of the most important things you can do for you and your family is to purchase adequate uninsured and underinsured motorist coverage. For those who either do not have health insurance or have high deductibles for their health insurance, adequate medical payments auto insurance coverage is, in many cases, also a good idea.

Illinois law provides that no auto policy arising out of the ownership, maintenance or use of a motor vehicle that is either registered in Illinois or principally garaged in Illinois vehicle can be renewed, delivered or issued unless uninsured and underinsured motorist coverage is included in an amount equal to the insured’s liability limits, unless specifically rejected by the insured, 215 ILCS 5/143a-2 (2018 State Bar Edition).

At the scene of a car crashDespite the high cost of medical care and vehicle replacement or repairs, the minimum liability insurance requirements in Illinois are only $25,000 as a result of injury or death to one person, $50,000 as a result of injury or death to two or more persons, and $20,000 as a result of damage or destruction of property in any one motor vehicle crash, 625 ILCS 5/7-203 (2018 State Bar Edition). Obviously, these minimum insurance requirements can be woefully inadequate even for moderate collisions.

Experience has shown that medical care required as a result of a motor vehicle crash can result in medical bills between $20,000 and $50,000 or even more per person for just one day in a hospital. In addition to medical care, property damage can be very significant in a motor vehicle crash. Motor vehicles having a value between $50,000 to $80,000, and even more, are now common on our highways. When purchasing auto insurance, often the initial motivation is to comply with minimum insurance requirements and protect you and your family from financial harm that could result should you be the at-fault driver in a motor vehicle crash.

Unfortunately, we often see motor vehicle crashes in which the not-at-fault victim of the crash had previously rejected additional uninsured and underinsured motorist coverage on their own policy and thereafter sustain injury expense and/or property damage in a crash where the at-fault driver is either uninsured or underinsured. It is always disheartening to see this, not only because uninsured and underinsured motorist coverage is usually not all that expensive, but also because the typical uninsured or underinsured driver often does not possess sufficient assets to pay a substantial claim even if a judgment is obtained against them. Doctors and hospitals do not render care or base their billing statements on who is at fault in an auto crash. They will demand, and are entitled to, reasonable compensation for their services if they treat you, regardless of who may ultimately be determined to be at-fault for the crash.

One way you can guard yourself and your family against financial hardship caused by an uninsured or underinsured driver is to insure yourself and your family to the same extent and with the same coverage limits for uninsured motorist and underinsured motorist coverage as you insure against liability to other persons who you may injure or cause property damage as a result of your driving errors. If you are renewing an existing insurance policy that does not currently include uninsured or underinsured coverage in an amount equal to your liability coverage (you have to specifically request such coverage), you may wish to do so.

Filing a claimAnother coverage that can be very important, especially for those without health insurance or those with high deductible health insurance plans is “Medical Payments” coverage. This is a somewhat unusual coverage in that unlike “liability” coverage or “uninsured motorist” coverage or “underinsured motorist” coverage, medical payments coverage pays for the reasonable medical expenses for those in your vehicle who are injured in a crash up to the limit of coverage you have purchased regardless of who was at fault. This can be important as often liability for a crash can be disputed even in rather obvious rear-end or intoxicated driver type collisions. Since the insurance company for the driver who appears to be at-fault has no obligation to pay anything unless and until there is either an agreed settlement or a final judgment, it can be many months or perhaps even years before payment is made on a liability or an uninsured or underinsured motorist policy. This is where the “pay regardless of fault” aspect of “Medical Payments” coverage can keep your credit rating intact and the debt collectors at bay should liability of the crash event be disputed or contested.

In order to determine the appropriate amount of liability, uninsured, underinsured and medical pay coverage for you and your family, we suggest that you discuss the benefits and costs with a trusted insurance agent.