The other day, a friend asked me to explain to them what uninsured / underinsured insurance (UM/UIM) insurance was, and whether they needed it. I realized that most people do not know what this insurance is, whether they have it on their current automobile insurance policy, or what their policy limits are. I started asking my friends if they knew what it was, and surprisingly, 8 in 10 did not know what it was!

While the issue of what coverage an individual or business needs is a question that depends on the individual or business, I can certainly explain what UM/UIM insurance is, and why you may want to add it to your current automobile insurance policy, or if you already have the coverage, why you might want to increase your UM/UIM policy limits.

OK, a bit of background: Texas law requires every standard automobile insurance policy

This made me realize that many people are driving around with these options not on their insurance coverage and might be surprised when they make a claim. Those people may not be able recover as much as possible or may not be able to recover any money.

First, let’s start off with UM:

Q1: What does UM stand for?

A: UM stands for Uninsured Motorist Coverage

Q2: What does it mean?

A: UM provides coverage when people are involves in an accident with another person that   does NOT have any car insurance. The UM coverage also covers people when they are involved in a hit and run.

Q3: What does UM cover?

A: Usually the UM coverage policy covers for losses. Those losses include: Permanent injury, lost wages, medical expenses, and pain and suffrage.

 Next, I will explain UIM:

Q1: What does UIM Stand for?

A: UIM is defined as Underinsured Motorist Coverage

Q2: What does it mean?

A: UIM will provide coverage when a person is involved in an accident and the other person does not have enough converge to cover your losses.

Q3: What does UIM cover?

A: UIM coverage policy covers for losses. Those losses include: Permanent injury, lost wages, medical expenses, and pain and suffrage. UIM will only come in to effect if the other other driver does not have enough coverage to cover your losses

So, now you know what the terms mean, do I really need this coverage?  The answer is YES. In fact get as much UM and UIM as possible, that you can afford. This coverage will protect you if you are involved in a motor vehicle accident and the other person doesn’t or doesn’t have enough coverage.  Make sure you know that this insurance will cover not just you but everyone in the motor vehicle at the time of the accident, which may include passenger that do not have any health insurance. This coverage will also cover you and your family members of your household if they are injured in another person’s motor vehicle.

Although we are all struggling in this tough economy we need to make sure that maybe saving a penny is not worth it if it will cost us for the rest of our life. I know there is nothing you can do about the other driver out there, but making sure that you have the right coverage you can take control over your own actions.

Having UM and UIM is an inexpensive way to protect you and your family should you be involved in a car accident.