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If we don’t have this coverage, or if we choose to buy only the minimum of this coverage, we won’t realize the error until it’s too late.
A recent customer complaint reinforced my view that it is important never to overlook or trivialize any of our insurance coverages. My client was driving his truck and his spouse was a passenger. (Passengers were and are permitted in the vehicle.) There has been an incident involving another vehicle. This other vehicle would be a personal car. The actions of this other vehicle are believed to have resulted in the very sad and unnecessary death of my client’s passenger and spouse.
The other vehicle, the car, fled and the police are looking for this vehicle.
When we complete an insurance application physically, electronically, or over the phone with an agent, we may need to choose our Uninsured Motorist/Underinsured Motorist (UM/UIM) coverage amounts. Too often, I have clients who tell me several things. Usually they sound like, “I need to save money, so just give me what I need” or “I only want what I need” or “Give me what I need.” me just the minimum so that I can start my business”. While most of us – and yes, myself included – can relate well to keeping insurance premiums as low as possible, UM/UIM is the one coverage we should never decline or buy. than the minimum available.
[Related: Insurance premium refunds: Know your rights]
UM/UIM is never fully appreciated until it is needed. Often though, because the insured wants to save money, they request and purchase the minimum amount of coverage or decline coverage altogether. Tragically, this decision to save money can be financially devastating when the worst happens. Almost everyone knows and understands what uninsured motorist cover is – it pays for our medical expenses, within our coverage limits, when we are in an accident and the other driver is at fault (at-fault) but does not have insurance. However, what most policyholders generally don’t understand is underinsured motorist cover – this cover also pays for medical expenses, within our coverage limits, where the other party to the accident is at fault. but does not have sufficient liability insurance to pay all bodily expenses for which they are liable.
If you, like me, have been in the trucking business for over 40 years, you have no doubt witnessed firsthand and/or heard of horrific accidents. Cars and trucks against other cars and trucks in all kinds of scenarios: truck against truck head-on at full speed; trucks avoiding other cars, accidents or road hazards; and of course all kinds of single vehicle accidents. The vast majority of these accidents required some type of emergency service, such as an ambulance ride and a visit to the hospital emergency room. All too often, these accidents will even require the services of an air ambulance in an attempt to save someone’s life. As we all know, these accidents frequently lead to surgery (sometimes multiple surgeries), extended hospital stays, physical therapy, and sometimes even more.
The point being, as I have personally experienced, investigation often reveals that many of these accidents involving a truck are the fault of another driver in a personal vehicle.
When this other driver is 100% responsible for an accident with us, he is responsible for all damages (bodily and materially) that he has caused to us. According to March 22, 2021 press release from the Insurance Research Council, one in eight drivers is uninsured. In that same news release, the national average for uninsured motorists in 2019 nationwide was 12.6%. Worse still, the press release points out that 6 states have 20% to 29.4% uninsured motorists among all drivers, while another 26 states have 10% to 19.9%. For anyone to assume that they will never have to use UM coverage is both naïve and very risky.
[Related: Don’t over-insurance your trucking business: 3 coverages you likely don’t need as an owner-operator]
And if this other driver, who is at fault and responsible, What is have insurance? In many states, the minimum coverage for a personal car is $25,000 bodily injury per person. This means that the other driver’s insurance policy will only pay up to $25,000 for the bodily injuries of each person for whom he is responsible. In addition to coverage of $25,000 per person, personal auto insurance policies typically come with a coverage limit of $50,000 per accident. Most personal auto insurance policies I see have these coverage amounts. If three people happen to be in an accident, all with $20,000 in bodily injury expenses for which such a driver is at fault, nothing of these three injured parties will have all of their bodily injury expenses paid, as the total of $60,000 of expenses exceeds the coverage limit per accident.
To come full circle, let’s first look at some of the cost ranges associated with personal injury claims. All but one of these amounts were provided to me by my representative at one of the insurance companies I write policies for:
- Ambulance ride — $400 to $15,000
- Air ambulance flight — $28,000 to $97,000 (as reported by NPR on September 26, 2018)
- Hospital emergency — $3,000 to $20,000 or more
- Surgery — varies by procedure, ranging from $50,000 to $250,000 for the same procedure in some cases
- Follow-up of surgeries — Reasonable to expect the same as the original surgery
- Hospital admission — Once a patient is admitted, bills can become very expensive, especially if there is time spent in an intensive care unit
It is painfully clear that bodily injury costs could quickly escalate to $250,000-$300,000, or even exceed $500,000 or more almost in an instant. It is then also easy to understand that having no or only the minimum UM/UIM coverage could leave most people in an unthinkable financial situation at the worst possible time, not to mention the agony of having to potentially making medical decisions based on lack of insurance coverage, which could have been completely avoidable.
In commercial automobile insurance (trucking insurance), there is often (but not always, depending on the insurance company) the option of purchasing UM/UIM coverage which costs only a few cents for the amount of UM/UIM coverage. UIM provided. For example, let’s look at a quote I prepared this week, with UM/UIM coverage worth $100,000 available at a premium of $87 for the entire year.
Sounds good, right? Yet, given the potential cost ranges above, it’s obvious that this could leave us hundreds of thousands of dollars short of coverage to pay for all of our bodily injury expenses. For this same quote, $1,000,000 of UM/UIM coverage has a premium of $210 for the whole year. That’s ten times the coverage for about two and a half times the premium. Why would anyone convey such great value and peace of mind! ?
[Related: Think before you leap: Plan and prepare before moving beyond just one truck]
For those operating a small fleet and hiring drivers, maximizing your UM/UIM coverage for the above is not only a wise decision, but it can also be a great business decision. UM/UIM coverage can help mitigate claims against your workers’ compensation policy. Given the significant costs associated with workers’ compensation premiums, the more proactive we are in controlling these costs, the better. Using the relatively speaking suitable for premiums UM/UIM cover to provide appropriate levels of bodily injury cover in the event of an accident where UM/UIM cover is used could therefore be one of the best business and insurance decisions you can make.
Finally, back to my client. When it is determined that an accident is the fault/responsibility of the other driver and that other driver fled the scene, the insured’s UM coverage pays the insured’s bodily injury claims up to the amount of the cover. The very tragic and sad incident of my insured reminds us all to think carefully if saving a few dollars is really worth it when it comes to insurance.
Need help with your own insurance? Call the author of this story, W. Joel Baker — if you have any questions about insurance that you would like to see answered by Baker here in Overdrive, leave a comment under this story or get in touch with him directly via his websites.
Find more information on fundamental business practices, including insurance issues, among a myriad of other topics, in the Overdrive/ATBS-co-product “Business Partners” handbook for new and established owner-operators, a comprehensive guide to running a small trucking business. Click here to download the 2022 updated edition of the Partners in Business Handbook for free.
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