How Much Uninsured Motorist Insurance Should I Buy? Ask a Lawyer Not an Insurance Salesman!

Barry P. Goldberg, is asked this question all the time. In fact, month in and month out, "How much Uninsured Motorist Insurance Should I Buy?" is by far the most visited page on my website. As an author and frequent blogger on the subject, I have a unique and practical viewpoint on the topic. In addition, I am aware that several insurance brokers now refer their customers to my website to support a conclusion that a customer should buy more coverage.

Here are some excellent guidelines that may help you decide the amount of your UM coverage;

  1. Of course, your regular third-party liability insurance limits should be adequate to protect you up to your conservative net-worth. If you own a lot—you must insure a lot. If you have little or no savings, home equity or net worth, you will have modest insurance requirements. (I recommend that you buy your insurance from an agent who will consult with you and make reasonable recommendations. Usually this means an independent insurance broker---particularly if you have significant assets.)
  1. Most importantly, never eliminate your Uninsured Motorist Coverage. (In California, UM coverage is optional. However, with 2 million uninsured drivers in the state---it is not an option for you!
  1. As a rule of thumb, I always recommend buying Uninsured Motorist coverage up to an equal amount with your third-party liability coverage, if you can afford it. This means, if you have $100,000 in liability coverage, you should buy $100,000 in Uninsured Motorist coverage. (Exception: always purchase the $30/$60 option even if you have a state minimum $15,000 liability policy!)
  1. Do not assume that your insurance company will recommend the proper coverage---they won't---and worse, they have no duty by law to recommend the proper amount of insurance coverage.

No one wants to buy insurance they do not need. But, consider that your liability insurance is to reasonably protect you and your family from the terrible injuries that can occur from an automobile accident. I have yet to hear a decent argument why you and your family should not have similar UM/UIM protection. Further, in California, it is estimated that over 20% of the drivers are uninsured. In some areas of Southern California we know that the uninsured rate is higher---much higher.

Perhaps, a worse anecdotal statistic is that over 50% of accidents are "Underinsured." This means that there is not enough insurance to pay for the reasonable property damage and bodily injury expenses. The amount of your Uninsured Motorist coverage becomes "Underinsured" motorist coverage when the amount of your policy is more than the available third-party liability coverage. With California's liability minimum of 15/30/5 established in 1973 and never raised, there is a strong likelihood that any given accident requires your own coverage. So, protect you and your family by following the above guidelines.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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