Uninsured/Underinsured Motorist (UM/UIM) Coverage

In this episode, Josh and Aaron explain why uninsured and underinsured motorist (UM/UIM) coverage may be one of the most important—and overlooked—parts of an insurance policy, sharing real-world examples of how it can protect families after a serious crash. They discuss common misconceptions about “full coverage,” why minimum liability limits often fall short, and how a relatively inexpensive policy addition can provide significant financial protection when it matters most.

 FVF Law is a well-credentialed, overwhelmingly 5-star reviewed personal injury law firm in Austin, TX. FVF strives to be the educational resource for the injured, available to guide those with questions about what comes next. It is FVF’s mission to ensure clients are prioritized and informed throughout the injury claim process, and to secure the best possible outcome. Josh Fogelman and Aaron Von Flatern founded FVF Law to offer a different kind of injury law firm, and a dignified alternative in the marketplace. They hope to show injured Texans that consulting a lawyer after an injury is a natural, and responsible thing to do.

Transcript

0:00:00.0: Hey, Josh.

0:00:00.1: Oh, hey, Aaron.

0:00:02.0: Hey, good morning.

0:00:04.2: Good morning to you, sir.

0:00:05.8: I wanted to ask you for some financial advice.

0:00:09.4: Yeah, well, you know, I'm always game to talk financial advice.

0:00:12.8: Yeah. So from a financial planning perspective, how much underinsured motorist coverage should I have?

0:00:19.9: Disclaimer: I am not a certified financial planner.

0:00:22.2: Okay.

0:00:24.5: But I do have a law degree.

0:00:26.6: Question withdrawn.

0:00:28.6: Yeah. Yeah. We're here today to talk about uninsured underinsured motorist coverage, which we refer to frequently as UM/UIM coverage. And it's kind of one of these underappreciated, undervalued, almost a financial tool, but layers of protection that you can purchase for yourself to protect yourself and protect your family. And we try and talk about this as often as we can with people that we love, friends and family, because it's so important. We've seen how important it is and can be in the event of a motor vehicle collision or any kind of collision involving a motor vehicle, if you get hit by a car or something like that.

0:01:15.9: So knowing that everyone at the cocktail party will consider you a nerd, why do you continually bring up this issue of underinsured motorist coverage?

0:01:25.8: I just convince myself that my discussion of this topic is so engaging that people can't help... In my mind, they flock around me at the party, you see.

0:01:38.5: Oh yeah, I can see it.

0:01:39.0: You understand?

0:01:39.6: They probably do.

0:01:40.3: They probably do.

0:01:41.9: But you have some... You have actually a personal connection to this, right?

0:01:44.3: Well, I do have a personal connection to this, yeah. As a result of my mom getting involved in a really, really bad collision where she was catastrophically harmed. And fortunately, she had followed my advice and acquired a bunch of uninsured underinsured motorist coverage. And I've just seen how people that are prepared can really benefit from that coverage, which is pretty inexpensive to acquire in the first place. So let's talk first. What is uninsured underinsured motorist coverage and how do you get it?

0:02:18.3: Short answer, it stands in the shoes of the at-fault party when they run out of insurance. Right?

0:02:25.4: Yeah, that's right. You get someone... In Texas, every person that's driving on the road is only required to carry $30,000 worth of liability insurance. Meaning, if someone else does something careless and hits you and hurts you, they may only have $30,000 worth of insurance coverage to pay for that. A lot of people don't even have any.

0:02:51.1: I was gonna say "may have" is a stretch. I think they probably have.

0:02:55.8: Yeah.

0:02:56.7: Right now, statistically, the median amount of insurance that people have is $30,000 in Texas. And on one side of that is zero, and on the other side of that, it jumps up to maybe 50 as the next notch.

0:03:08.5: That's right. And lots of people out there driving carelessly that have no insurance at all. And that's a huge problem. And even if they have $30,000 worth of insurance, understand that that $30,000 pile, if they have it, has to pay for your lost earnings, your medical expenses, any medical expenses you may have in the future, and any other losses you might have sustained as a result of the crash, your physical pain, your physical impairment. It's a maybe $30,000 payment for everything you have lost now and forever into the future. And to be fair, there are people that are prudent that are driving around and have much more coverage than that. But I think you and I can attest that over the past almost 20 years that we've each been doing this job, it is very uncommon for a person who really badly hurts somebody to have adequate insurance to cover the entirety of the losses. And so this is where uninsured underinsured motorist coverage comes into play. Because you can't control what the other people on the road have purchased for insurance, for liability insurance, but you can control how much insurance you purchase to protect yourself from being harmed by one of those folks out there driving around that does not have a good liability insurance policy. That's what uninsured underinsured motorist coverage is.

0:04:56.2: Now, you can't insure yourself more than you insure against hurting someone else, right? Like you can't have a million-dollar underinsured motorist policy available for yourself and then only have 30,000 in case you hurt someone else. They have to be at least equal. And often times that you... But here's the point that I wanted to make, you can have your underinsured motorist coverage less than the coverage that you have for other people. And when we see that, it drives us kind of crazy because it's like, how is it that you haven't purchased enough for your family? You've considered what would happen that you might owe somebody this money. And I think the reason for it is the mentality is sort of they're still thinking the way they've been conditioned by insurance companies to think about lawsuit abuse. They believe they're buying a million dollars of coverage for other people because they're scared of lawsuits, not because they want to compensate those people for the harms and losses they've gone through. But when the shoe's on the other foot and their own family member gets hurt, I think they're kicking themselves because it's like, you could have thought about this in terms of the actual harms and losses that are caused by these crashes in light of how expensive medicine is and just in light of what is at stake with your job and how much you can lose from losing your job. Get the coverage, protect yourself, and it's a financial decision. That's why I kind of brought this up as a sort of financial planning discussion because this can really affect your long-term finances.

0:06:31.4: Yeah. And the reality of it is it's not that expensive to acquire the coverage now, and when you need it, it will pay for itself many, many, many, many times over. And we have a lot of clients that come in and whenever I talk to people about this, they don't even know or understand what it is. And I get it. We know what it is because we're in the business of helping people collect on claims against their own uninsured underinsured motorist coverage, which is something that we frequently do, and it's usually a good decision when we advise people to do it. I think when people are acquiring car insurance, they're not really thinking... Many people aren't really thinking about how to really protect themselves, like you said. What they're thinking about is, "Well, if I hurt someone, I want to make sure that I can pay for that damage without getting sued, or I want to protect whatever assets I might have, things of that nature."

0:07:34.6: Or they're trying to be smart with their money.

0:07:36.1: Or they're trying to be smart with their money. Often people are getting on and... Just getting online and purchasing the minimum amount that they can purchase through the insurance company's website, or they're talking to their insurance agent and just saying, "Hey, look, I want you to give me the best coverage I can for this amount of money," or, "Buy me the cheapest coverage that I can," trying to save money because they think, "This will never happen to me. I'm never going to hurt somebody else. I'm a careful driver. I don't need to pay a lot of money for a big insurance policy because I don't present a danger to the community." But they're not asking themselves, "Well, what happens if somebody else who is a danger in the community does hurt me and they don't have the means to pay for it and I'm left footing the bill?" And that's the question that needs to be answered when evaluating what you're going to do for your own insurance coverage. And it's an incredibly, incredibly important decision. And I think a lot of people rely on agents to just put them in the best position possible. They walk away from the insurance acquisition, buying the insurance online, and they think, "Oh, I got full coverage. I'm in good shape."

0:09:02.7: We hear that all the time.

0:09:03.6: We hear that all the time. Get on the phone, someone's been hurt in a crash. Talk to me about your insurance coverage. What do you have for uninsured underinsured?

0:09:12.5: "Oh, I've got full coverage."

0:09:14.1: "I've got full coverage. I'm good."

0:09:17.2: Yeah.

0:09:17.7: Well, full coverage doesn't necessarily mean that you've actually purchased this particular product.

0:09:23.1: Or in an amount that makes sense.

0:09:25.4: Yeah. Absolutely. Or in an amount that makes sense. Often people don't have it at all even though they have full coverage. And I mean, I just... I wouldn't get onto this podcast and talk to you about this or talk to people about this so frequently unless I hadn't seen firsthand how important it can be to have that coverage when a person needs it. Like I said, like you pointed out, my own mother was involved in a really, really bad crash a few years ago and catastrophically injured, changed her life. She had hundreds of thousands of dollars worth of medical bills, and fortunately, we had acquired a large uninsured underinsured motorist coverage policy for her. We were able to go and secure that money to help her get back on her feet and put her life back together. It made a meaningful difference to her and it didn't really cost her very much money.

0:10:29.4: That's the surprising thing is it's not that much more to max it out.

0:10:31.3: That's right.

0:10:33.2: If you can afford it.

0:10:34.1: Absolutely. And there's one other thing that I think is worth discussing here, which is for those people who have really taken the time to cover themselves and purchased a large liability coverage policy or an umbrella policy, most of the time, what people don't understand, they say, "Hey, look, I have... Not only do I have full coverage, I've got a big insurance policy and I've got an umbrella policy, another second layer of insurance above my initial GEICO coverage or Safeco coverage, whatever it may be. I've got a whole 'nother layer, another stack of liability insurance," and they assume, "Oh, I'm paying a bunch more money to really protect myself. Surely that umbrella policy is gonna cover me for all of the things." Well, it doesn't. Umbrella policies...

0:11:01.6: Shocking.

0:11:29.1: It is shocking. And umbrella policies do not necessarily apply to uninsured underinsured motorist coverage. In fact, they usually don't.

0:11:39.3: I was gonna say they almost never do.

0:11:39.8: Almost never do. So if you have acquired or are considering acquiring an umbrella policy, another layer or multiple layers of liability insurance and you're working with an agent on that, you should work with an agent on that and ask specifically that your umbrella coverage also apply to uninsured underinsured motorist coverage, UM/UIM, because that can pay huge, huge dividends in the event that you need it. And even though it's unlikely, it's one of those things that when it happens, you wish you had done this earlier.

0:12:19.8: Yeah. And there's people that will say, "Well, if I go get a million dollar underinsured motorist policy, I'll probably never get in a crash." Oh, great.

0:12:30.7: Perfect.

0:12:32.1: That's great. Don't worry about it.

0:12:32.7: Absolutely.

0:12:33.4: Just go get it anyway.

0:12:35.2: It's just... It's one of those things. It's better to have it. It's very cost effective. If you're already out there buying a decent insurance policy anyway, the add-on will cost you maybe a few bucks, ten bucks a month, and the dividends that it can pay when you need it are immeasurable. So really get out there, consider doing this, it's the biggest piece of advice that we give to our friends and family when they ask us about insurance coverage, and we hope you follow it.

0:13:04.3: One last question. Which major insurer do you think will sponsor this podcast now?

0:13:10.0: Yeah, I don't think any of them like us very much. So none.

0:13:11.8: All right, all right. Fine.

0:13:13.1: The answer is a trick question. None.