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Wednesday, October 6, 2010
By Michael Nichols
Michigan law requires that everyone carry bodily injury liability coverage of at least $20,000 per person/$40,000 per occurrence. However, as you may guess, not everyone carries automobile insurance or if they do, they only carry the minimum. A classic example would be a teenager who gets his/her driver’s license and wants to pay the least amount to insure their vehicle. If the teen is at-fault for an automobile accident and causes serious injuries (or even death) to you or a loved one, the most you or your loved one could recover from the negligent teen for pain and suffering is $20,000. This is grossly inadequate to compensate you if you are in an auto accident that causes serious injuries to you or a loved one. Therefore, you should know about underinsured and uninsured coverage. Your Declaration page from your auto insurance company will confirm whether or not you have underinsured and uninsured coverage. I cannot stress how important it is to have both.
Uninsured coverage is an optional coverage you want to buy. It will protect you if you (or a loved one) are injured by a negligent driver who does not have automobile insurance coverage. Underinsured coverage is also an optional coverage that you want to buy. Underinsured coverage will protect you if you or a loved one are injured by a negligent driver in a Michigan auto accident and the negligent driver does not have adequate liability insurance to fully compensate you for your serious injuries.
If you sustain serious injuries, death or even a traumatic brain injury in an auto accident and want to sue the at-fault, negligent driver for pain and suffering, excess wage loss (also called non-economic damages), you want to make sure that you are adequately compensated for your loss. An example: at-fault driver runs a red light and t-bones your vehicle, causing serious injuries to you. The at-fault driver only has $20,000 coverage. That means that that is the most you can recover from the at-fault driver for your pain and suffering. What if you sustained a traumatic brain injury or ruptured discs that required surgeries; the $20,000 would definitely be inadequate to compensate you for your serious injuries you sustained as a result of the auto accident. This is why you want underinsured benefits. In this scenario, if you had underinsured coverage for $500,000, you could recover the $20,000 from the at-fault, negligent driver and then also recover $480,000 ($500,000 minus $20,000), from your own auto insurance company via the underinsured benefits you bought.
Now, say you are in the same accident described above and the at-fault driver does NOT have any insurance coverage at all. This is where your uninsured benefits would come into play. For the person who does not have uninsured coverage through their own insurance company, they typically cannot recover anything from the at-fault driver. In other words, you are out of luck for recovering any monetary amount for your pain and suffering. However, if you have $500,000 in uninsured coverage through your own auto insurance company, then you could recover up to the $500,000 from your own insurance company for pain and suffering, etc.
The cost of underinsured and uninsured coverage is very inexpensive. I recommend that you should purchase a minimum of $500,000 for both underinsured and uninsured coverage. And, if your insurance company does not offer underinsured and uninsured, I would recommend that you change insurance companies.
Wendy Schiller-Nichols focuses her practice on serious Michigan automobile accidents. Ms. Schiller-Nichols has experience in dealing with insurance companies during the difficult times after you have had a automobile accident. If you have any questions, you can contact Ms. Schiller-Nichols at 517-432-9000.
Disclaimer: The material in this article has been prepared by the Nichols Law Firm, PLLC for information purposes only and is general information designed to give the reader a basic understanding of the area covered. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. Individuals should not act upon any information provided in this article, and should seek the advice of legal counsel licensed in their state.