UIM/UM Insurance Part One: Why Should I Have UIM/UM Coverage?
Hello, my name is John Maroney and I am a lawyer at The Sawaya Law Firm.
Today I would like to focus on Under-Insured/Uninsured Motorist Insurance, or UIM/UM insurance as it is commonly abbreviated. I have this type of insurance, and I make sure my family does too.
So What Does This Insurance Do?
This type of automotive insurance is designed to protect people if they are hit by someone who does not have enough insurance coverage. Medical treatment after a motor vehicle collision is often a necessity, and medical bills can skyrocket quickly. In Colorado, the minimum amount of liability coverage (money that the insurance company pays to someone their client hits) is $25,000. That does not go a long way, especially if surgery or steroid injections are necessary after a collision. You cannot control how much automotive insurance the other drivers around you have, but you can take steps to protect yourself from large medical bills caused by people with minimum coverage. That is where UIM/UM insurance comes in: this is your own insurance that pays money to you and will cover any loss you might experience caused by the negligence of another person.
If I Have Health Insurance, Why Would I Want UIM/UM Insurance As Well?
It is true that health insurance can protect you against a large amount of medical debt after a motor vehicle collision. If you do not drive often, then sticking with just your health insurance might be the best option. But if you commute to work every day, and run errands on the weekends, that is a lot of time on the road surrounded by other people who might or might not be making good decisions. And, there are benefits to having both types of insurance in place.
First, health insurance only covers your medical bills. UIM/UM insurance covers medical bills, but it also provides compensation for any pain caused by the collision, the inconvenience of going to doctors appointments, and any lost wages you might experience in the aftermath of a collision. It also compensates you for any permanent impairment that might result from a motor vehicle collision, which health insurance usually does not cover. This can be a big deal, especially if it affects your ability to work.
Second, you can use both types of insurance for the same treatment! Here’s how that works: Let’s say you go to the hospital to get checked out after a collision, and that bill turns out to be $10,000. The hospital is going to bill your health insurance first. But, almost all hospitals have a contractual relationship with the health insurance companies. Blue Cross knows how medical billing works, and they have a lot of leverage when they negotiate with medical providers. Health insurance companies, almost as a rule, do not pay the full billed amount. Let’s say for this example Blue Cross pays $3,000 based on their contract with the hospital for these types of services. Now, your $10,000 hospital bill is satisfied and you do not owe the hospital anything. Blue Cross is going to want that $3,000 back at some point (we’ll cover subrogation in another article), but you have a medical bill in your hand that says the treatment you received was worth $10,000. Here is where the UIM/UM insurance comes into play. Colorado has a rule that says the UIM/UM insurance companies cannot benefit from your having health insurance. C.R.S.A. § 13-21-111.6. You had the foresight to get health insurance; you paid the premiums on it; you should get the benefit of it. So what does the UIM/UM insurance have to do? They have to pay you the $10,000 because that is what the treatment was worth. So now, the medical bills have been satisfied, the UIM/UM insurance has paid you $10,000, and you only had to pay Blue Cross back $3,000. That is a $7,000 profit.
Medical bills can reach $50,000, $100,000, maybe even $200,000 or more. UIM/UM insurance is relatively cheap, and having it when you need it can go a long way toward offsetting other costs that come with a motor vehicle collision such as court filing fees, medical records request fees, expert witness fees, etc.
While the benefits we talked about today are great, there are even more benefits from a legal perspective. We’ll discuss those in more depth next time, so stay tuned!