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Another governor was also in the news recently, this one in Arizona; he vetoed a bill that would have increased required insurance limits for all drivers in the state. The current required limits in Arizona, $15,000 for injuries to any one person, $30,000 for all injuries from the same accident, and $10,000 for property damage ($15/30/10), date back to 1972. The new legislation would have increased those to $25/50/25. The Arizona Department of Transportation reports the average actual loss from a motor vehicle accident resulting in death is in excess of $1.5 million, while for other injuries the number is around $93,000. Given those statistics, an increase from $15,000 to $25,000 per person for bodily injury liability, while a move in the right direction, still falls way short of actual claim costs.
The governor’s reason for the veto was that lower income folks could not afford the higher premiums for the higher limits. He felt that the estimated $91 average premium increase would lead to more uninsured motorists. An estimated 12% of all Arizona drivers are uninsured now.
This neatly defines a real problem for drivers anywhere. On the one hand, required insurance limits in most states are ridiculously low. The average requirement countrywide hovers around $25,000 per person, with only five state requiring more than that. Some pretty large states are even lower: California, New Jersey and Pennsylvania in particular only require $15,000, while Florida only requires a $10,000 limit.
On the other hand, countrywide an estimated 12-13% of all drivers have no insurance at all, with wide variation by state as you might expect. Florida leads in this sorry statistic, too, with an estimated 26% of all Florida drivers uninsured. At the other end of the scale, the five states with the fewest uninsured motorists still averaged six percent uninsured, one of every sixteen cars on the road.
Not insured means no insurance, at all. Not included in these statistics are drivers who might only carry just the low minimum mandatory limits of insurance required by each state. There are no reliable statistics for these, but if you assume that the number of drivers with minimum state required limits just equals the number with no insurance at all, then your odds of being in an accident with a driver in Florida with either no insurance or the minimum $10,000 limits are fifty-fifty; countrywide, perhaps one in four.
So, how do you protect yourself? The auto policy you buy, be it a personal or commercial policy, has two primary liability coverages. You know about bodily injury and property damage liability, covering your liability to others if you are found at fault in an accident. The other coverage is uninsured/underinsured motorists coverage which protects you for liability that should have been paid by another driver who was at fault in an accident and who either had no insurance, or inadequate limits.
You can, and should be, properly insured for liability to others and protect your assets with high limits, but you cannot rely on other drivers on the road to be properly insured to protect you. The way you protect yourself here is with high uninsured/ underinsured motorists limits in your own policy. This is where you can buy protection that either 1) steps in when the other driver who causes your accident is not insured, or 2) supplements inadequate limits of insurance for those underinsured drivers who carry minimum or low limits.
The beauty of this coverage is that you can decide how much insurance you would like other drivers to carry, and then build it into your own policy. Sure, you are paying for it, but this coverage is still relatively inexpensive, especially when you consider the number of uninsured or underinsured drivers on the road. This is not protection you should skimp on.
So, some things to consider: in your personal auto insurance policy, you’ll want to buy limits high enough for a personal umbrella or excess liability policy to attach. Your uninsured/underinsured motorists limits should equal these limits, and you can make sure your umbrella policy covers UM/UIM as well. And consider stacking UM/UIM limits in states where that is allowed; stacking simply means that you can tap a separate set of UM/UIM limits for each vehicle on a policy, or from multiple policies.
All these options can exist in a commercial auto policy, too, but decisions are a bit more complicated. The drivers of the commercial vehicles in your fleet are all presumably covered by workers compensation insurance for any injuries they suffer during their working hours. If the other at fault driver has adequate insurance limits, so much the better, but if not, the employee still gets their full WC benefits; there is no need to pay for high UM/UIM limits for these vehicles. Officers and executives who are furnished with company owned cars which are at their disposal for both business and personal use are another problem. You’ll probably want to cover those vehicles with high UM/UIM limits where that is allowed.
So, a summary: uninsured and underinsured motorists are a problem everywhere, accounting for perhaps 20% to more than 50% of all drivers you’ll likely encounter on the road. Solutions to protect yourself are available, but they require some customizing of your auto policy, be it personal or commercial. We can help you with that.