FOR YOUR CONSIDERATION: HOW MUCH INSURANCE IS ENOUGH?

Pursuant to California law, all drivers are required to have insurance coverage while driving a motor vehicle of any kind. The required coverage is known as liability insurance and must be a minimum amount of $15,000/$30,000. These insurance figures represent coverage in the amount of $15,000 per person/occurrence and $30,000 for more than one (1) person.

At first glance, these figures seem sufficient to cover any minimal vehicle
accident. However, what if there were major injuries or multiple persons injured by the negligent person? Herein lies the issue: What if there were four (4) persons in the vehicle that was struck by the negligent driver all suffering from major injuries? The analysis now becomes more complicated and extreme. In the above scenario, all four (4) persons would have to share the insurance policy maximum liability limits of $30,000. Is there any saving grace that the innocent persons can initiate to protect themselves from this potential devastating situation?

The answer to this complex question is yes. Most insurance companies offer Uninsured/Underinsured Motorist coverage. The additional insurance coverage is commonly known as UM/UIM coverage. This provides insurance for those who have been injured by a negligent driver who was either Uninsured or Underinsured (UM/UIM) at the time of the accident. This allows the innocent party compensation for their injuries and other losses caused by the negligent person.

Underinsured Motorist coverage works in a similar fashion. The Underinsured Motorist coverage comes into play when the negligent person has insurance but does not have enough insurance to pay for the entirety of the injured persons damages. In the scenario above, if the negligent persons causes injury/damage to the innocent person that exceeds $15,000, the Underinsured Motorist coverage would come into play to cover the balance of the damages/injuries up to the policy limit of the Underinsured Motorist coverage.

The caveat to the above scenario is that the Underinsured Motorist insurance must exceed that of the negligent person’s insurance in order for the Underinsured Motorist coverage to come into play. Therefore, it is recommended that any Uninsured Motorist or Underinsured Motorist coverage be at least $30,000/$60,000 or higher.