We’ve received a number of questions raised by our last blog post about legislative changes to Oregon Uninsured Motorist (“UM”) and Oregon Underinsured Motorist (“UIM”) auto insurance.
The first question is “What is the purpose of Oregon UM/UIM insurance?”
If you are hit by a person with no insurance, you can make an Uninsured Motorist insurance claim against your own insurance policy.
If you are seriously injured by a person with a small amount of insurance and either your financial losses (called “economic damages” such as doctors bills and wage loss) or the severity of your injuries are worth more than that person’s full insurance policy, then you can make an Underinsured Motorist insurance claim against your own insurance policy. This requires your own insurance company to approve the settlement before you settle, and the UIM claim to be set up properly, or you can lose your right to make a UIM claim.
The second question posed was “Is UM/UIM insurance mandatory in Oregon?”
UM/UIM coverage is mandatory in auto insurance policies written in Oregon. You buy it as part of your policy. The limits of your UM/UIM are by law, equal to the amount of your liability policy. The only way that isn’t the case (even if written differently in your insurance policy “dec page”, which we see from time to time) is for the policyholder to sign an agreement with their insurance company saying they want a lower amount of coverage. (You should never sign such an agreement). We find this to be rare. More often what you see is a clerical error where the UM/UIM coverage does not match the liability policy amounts purchased by the policyholder. As an example, someone buys a $100,000 liability policy, but their insurance policy “declaration page” then says they have $25,000 in UM/UIM coverage. This is not possible under Oregon law without the waiver signed by the policyholder. We have seen several cases of this. In those cases we contact the insurer and let them know that unless they have the signed waiver form, the policy limits for UM/UIM coverage are equal to the liability policy. In all but one case, there was no signed waiver, and the client gets the increased amount of coverage.
The third question is “Is my UM/UIM coverage increased if I have an Oregon umbrella policy?”
An “umbrella policy” is usually offered to those who have both auto and homeowners coverage with the same insurer. It is an extra policy to cover situations where the policyholder injures someone else, and wants increased coverage for their liability. Unfortunately, most Oregon umbrella policies do not include UM/UIM coverage.
UM/UIM insurance is particularly important not just because so many people are uninsured. It is because they are also underinsured. Most people with assets buy umbrella insurance to minimize their risk of a large financial loss in the event they seriously hurt or kill someone. What they don’t realize is that they aren’t really covering themselves or their family. Anyone who wants to protect themselves or their families as a priority should buy more UM/UIM coverage than their liability policy. This is particularly important for those with large incomes, or those with large monthly expenditures. Most of our clients with large income (such as doctors) who sustain injuries that will change their career, end up with UM/UIM cases which makes this type of coverage particularly important.
While an umbrella policy does cover a situation where you have a large liability exposure, in most cases Oregon umbrella policies do not cover situations where you are hurt by an uninsured or underinsured driver. So, while you can get an umbrella policy after you buy a certain amount of liability coverage for both your auto and home, you don’t get extra UM/UIM coverage.
As an example, lets say that you can buy an umbrella policy once you buy $250,000 of liability coverage on your auto. If you buy an umbrella policy there is no reason to buy more liability coverage, because the umbrella will cover your liability beyond that. But, there is a reason to buy more UM/UIM coverage, because the umbrella policy doesn’t cover you or a family member if hit by a person with no insurance or very little insurance. So, lets say that you buy $250,000 in liability coverage, and buy a $5 million umbrella policy. You have plenty of coverage for most serious injury cases if you cause the collision. But what about if you get hit by someone else who has no insurance? You only have $250,000 of Uninsured Motorist coverage. If you have high medical bills, or are a high income earner, that isn’t going to cover your loss, and you can end up with life-long debt and lose everything because of someone else’s negligence. With some of our clients having up to $1 million in medical bills alone, and many of them unable to work normally again, having a high value UM/UIM insurance policy becomes critical to covering the bills. Which is the reason why it is important to talk to your insurance agent about maximizing your UM/UIM coverage even with an umbrella policy, before it is too late. Generally UM/UIM coverage is inexpensive and it is the most important insurance for protecting yourself and your family from a devastating loss caused by someone else’s carelessness.