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Reading another post on this site about uninsured/underinsured motorist (UM/UIM) coverage provoked me to talk about this issue in Alabama. This type of insurance is purchased from your own carrier and covers situations where the at fault driver that hits you either is uninsured or does not have enough coverage to compensate you for the damages that you have sustained. In Alabama, there is a good chance that this could happen to you. According to the Insurance Research Council‘s latest statistics, 26% of Alabama divers are uninsured.

In Alabama, your insurance carrier is required by law to offer a minimum of $20,000 in UM/UIM coverage as part of your insurance policy. Thus, by example, if a judge or jury determines that the uninsured driver who hit you caused you $50,000 in damages and you have the minimum UM limit, you would recover $20,000 from your own insurance company. If the at fault driver in that same example had $20,000 in liability coverage, you would recover both policy limits and could pursue the remaining $10,000 of your judgment against the at fault driver (good luck).

I will be discussing more about UM/UIM coverage this week, but would offer these basic thoughts today:

1) Buy all that you can afford. Your agent may not push it, but you will be amazed at what little price difference there is between $20,000 and $100,000 worth of coverage. Given the price of medical care today, you need all that you can get.

2) You can legally disclaim UM/UIM coverage by signing a written disclaimer – DON’T DO IT. The pittance you save is not worth the risk (see paragraph 1).

3) Last, if you find yourself in a situation where the person who hit you is uninsured or does not have enough liability coverage to compensate you for your damages, do not hesitate to file a claim with your own carrier. IT WON’T RAISE YOUR OWN RATES. Insurance companies do not treat a claim where you are not at fault as a negative one.

In the remaining posts in this series, I will discuss "stacking" of claims to expand your limits, damages that you can recover and what to ask your agent about when buying this type of insurance.

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