These are uncertain economic times. We’re all trying to save money. If you have a car insurance premium due, you may be wondering, “Should I waive UM coverage to reduce my insurance premium?” If you’re facing such a decision, we want to offer you some guidance.
The “UM” in “UM coverage” means “uninsured motorist” or “underinsured motorist.” UM coverage through your insurance company protects you from the danger that another driver in an auto accident may hurt you but not be able to pay for your injuries. Specifically, if the other driver doesn’t have any liability insurance, or doesn’t have enough liability insurance to pay for your medical care, wage loss, and certain other damages, your UM coverage pays. If you have auto insurance, you may have UM coverage. If you have auto liability insurance, your insurance company is required by law to provide UM coverage to you, UNLESS you sign a written waiver rejecting UM coverage. If you don’t recall whether you signed a waiver of UM coverage, call your insurance agent or company to ask for a copy of any documents you signed.
If you’re paying for UM coverage, you may wonder whether you should waive UM coverage. You would save money in the short term: your overall insurance premium may be reduced by a few hundred dollars every year. But those temporary savings could be completely eliminated if you get in just a SINGLE auto accident. Many drivers don’t have liability insurance. If the driver who crashes into you doesn’t have liability insurance, you’ll probably face an uphill battle getting the driver to pay for your injuries. Even if the other driver purchased insurance, Louisiana law only requires $15,000 liability coverage per person per accident. Although that may sound like a lot, it isn’t. In many cases, $15,000 won’t be enough to cover your emergency room visit and out-of-pocket medical expenses—not to mention the costs of car repair, lost wages, and other damages. UM coverage is designed to protect you from this exact risk: the other driver who hit you doesn’t have enough (or any) liability coverage to compensate you for your injuries.
Our recommendation: do NOT waive UM coverage to save money on your auto insurance. Keep your UM coverage, and explore other options for saving money on your auto insurance. Call your insurance agent and ask for any discounts that may apply, such as good driver, military, or student discounts. Consider removing comprehensive and collision coverages (“comp and collision”) on older vehicles with low property values.
Giving up your UM coverage would save you a little now, but you may have to say goodbye to thousands of dollars in the future. Insurance exists to protect you from risk. The risk created by uninsured and underinsured drivers is a big one. You owe it to yourself and your family to protect against that risk. Keep UM under your insurance policy.