What is UM / UIM Insurance? Your Guide to Uninsured Motorist Coverage in Arkansas
Every day, Arkansas drivers sign up for car insurance with a wide range of different insurance companies. Then, they have to choose between several additional coverages with different limits and deductibles that they can add on to the basic liability-only coverage. It can seem overwhelming, but it is extremely important to consider these options.
Drivers typically understand why they need liability insurance to protect themselves and others who use their vehicle. If someone negligently operates the vehicle and causes an accident, liability coverage can protect them from potential damages. However, many drivers either do not fully understand or do not appreciate the importance of the additional coverages that they can add to their insurance policies. The primary additional coverages that are often disregarded are: Medical Payments (MedPay); Personal Injury Protection (PIP); and Uninsured and Underinsured (UM/UIM) coverage.
Insurance companies write their policies specifically to be confusing. As a result, after an accident, many drivers are unaware of exactly what their insurance company will pay and what their coverage limits truly are. Some drivers are shocked to find out that they don’t have enough insurance to pay for their accident and for the injuries they sustained, especially if the “at fault” driver didn’t have enough insurance.
What is UM/UIM?
Uninsured and Underinsured (UM/UIM) insurance coverages pay insurance benefits for your damages if the other driver who caused the accident is either uninsured or does not have sufficient insurance limits to fully pay for the damages you have incurred.
- Uninsured motorist coverage – Used when you’re in a crash caused by an uninsured driver or a hit-and-run. This coverage will pay for injuries you or your passengers suffer.
- Underinsured motorist coverage – Used when a driver hits you and has some insurance, but not enough to cover your recovery costs. Like uninsured coverage, it pays for injuries you or your passengers suffer.
Uninsured motorist coverage not only applies to drivers who do not have insurance, but also drivers who flee the scene of an accident (hit and run) and drivers who have stolen a car. Without underinsured motorist coverage, you could be responsible for all of your medical payments and property damage after a motor vehicle collision even if the accident was no fault of your own.
How does UM/UIM work?
Suppose you were injured in an accident with a drunk driver who did not have current insurance on his car. Who would pay your medical bills? Normally, you would be able to file a claim with the “at fault” driver’s insurance company, but since the drunk driver who caused the accident didn’t carry insurance, you would be unable to collect compensation through them. Your only option would be to collect compensation from your own insurance company through your UM/UIM motorist policy.
Arkansas Insurance Laws require insurance companies to offer UM/UIM insurance coverage to all of their drivers, but it is an optional insurance coverage that drivers are allowed to opt out of. If the insured driver does not want to elect for this coverage, they must sign a rejection denying this coverage. The law only requires an insurance company to offer this coverage one time, and one signed rejection will remain in place until it is withdrawn by the person insured.
Problems occur when a person is injured in a collision and they believe that they have full coverage car insurance, even though they previously rejected the uninsured or underinsured motorist coverage. If the at-fault driver does not have car insurance, and the injured person rejected uninsured (UM) coverage, there is typically no place for the injured person to recover. They may be stuck with a damaged car and no one to help pay for hospital expenses.
Medical Payments (MedPay) coverage is another optional insurance coverage that pays for the medical expenses of an insured person and his or her passengers after a motor vehicle collision. MedPay will pay out its benefits regardless of who caused the collision and will generally cover an insured person who is permissively driving someone else’s vehicle. It also typically provides coverage for an insured person and or his or her family members who are injured as pedestrians.
Personal Injury Protection (PIP) coverage is required in Arkansas and pays benefits for injury expenses and lost wages incurred by the insured person and his or her passengers injured in a motor vehicle collision.
MedPay and PIP are no-fault insurance coverages, which means they are required to pay the insured regardless of who is at fault. MedPay is the same as PIP except it does not pay for lost income, only for medical expenses.
What happens if I don’t have UM/UIM?
Arkansas law requires that all drivers have a minimum of $25,000 in insurance in order to be driving. But $25,000 may not cover all of the medical expenses, time off work, any permanent injuries, or future health expenses that are likely to be incurred because of the injuries. Even when the limits are higher, it still may not be enough.
For example: A driver hits you and as a result, you lose your leg. Policy limits of $100,000 would not be enough to take care of your medical bills, your loss of income or maybe even your livelihood, and certainly not the loss of your leg.
To be smart, check with your insurance agent about increasing your own limits and about getting additional coverage on top of liability insurance that would protect you if the at-fault driver doesn’t have enough insurance to pay your damages (underinsured motorist “UIM”) or if the person who hits you violated the law by not having any insurance (uninsured motorist “UM”), or to cover your medical expenses that health insurance limits won’t meet (med pay).
Without UM/UIM insurance, you may not be able to recover lost wages and the money you need to pay all of your hospital bills and rehabilitation. This can significantly impact your future and your recovery, and could place unnecessary financial burdens on you and your family.
Is UM/UIM worth it?
You’ve probably seen the option to add “uninsured” or “underinsured” coverage to your car insurance plan. Have you ever wondered if it’s worth it to add the additional coverage – or wondered when you would need it?
Well, before you opt out of your Uninsured or Underinsured Motorist Coverage (UM/UIM) insurance policy, consider this: in Arkansas, 16 percent of drivers are uninsured. That means, if you’re in a car accident in Arkansas, there’s a 16 percent chance that the person at fault is uninsured and does not have liability coverage.
The cost of adding the additional coverage varies depending on your age, vehicle and location. The average cost of damage in a car accident is $7,500 – not counting medical bills. The decision to add uninsured/underinsured coverage to your plan comes down to how comfortable you feel taking on the risk of having to pay for damage from an accident you didn’t cause. In general, the cost of adding UM/UIM with your insurance company is minimal each month, but its value cannot be overstated. After an accident, Uninsured and Underinsured Motorist Coverage keeps you from getting stuck with bills from an accident you didn’t cause.
We’re There When You Need Us
It is essential for drivers to understand the coverages they might be rejecting when signing up for car insurance. Even if you currently have car insurance, check your declarations page to determine if you have sufficient insurance coverage or if you need to make changes and elect for these additional coverages on top of liability. If you are injured in a motor vehicle collision and have doubts or questions about your or the other driver’s insurance coverage, contact a personal injury attorney at Rainwater, Holt & Sexton so we can help you determine the available insurance coverages under which you may recover.