Your car insurance includes something called underinsured motorist coverage (UIM) and its partner and friend uninsured motorist coverage (UM). You should have these. They are required by Pennsylvania law. Simply put, UIM protects you if you are injured by someone without enough insurance. UM protects you from hit and run drivers or when a deer jumps in front of your car and you are injured in the resulting crash. The deer does not have coverage unless they are a very law-abiding deer.
Why do I have to go back and harp on this issue when it is required by law? Unsurprisingly, your insurance carrier really does not want you to carry it so they allow you to reject it and it reduces your premium a tiny bit. What are you doing when you reject UIM? You are hurting yourself.
Why doesn’t your insurance company want you to carry UIM? Well, because contrary to the situation where another driver hits you and you sue their insurance company, in the UIM context, you are suing your own insurance company for not paying you what you contracted for. So, by encouraging you to reject UIM, they are protecting themselves from you, their policyholder, suing them. Not nice. Sneaky, underhanded? Or buyer beware? Consider yourself warned.
I would like to sit outside every State Farm office with a sign saying GOT UIM?, but it would not be a great use of my time. If I ever speak with anyone about this subject, their eyes glaze over and they are confused or don’t understand it because it is hard to understand in abstract.
Here is a concrete example for you. I have a client who was in a car crash caused by an F-150 pickup truck. He suffered a series of fractures and other injuries. A lawsuit was filed against the F-150 driver and settled for $92,000 of the $100,000 available coverage. However, the case is worth $300,000 in my mind. If the client did not have UIM, then he would be left with a total possible recovery of $100,000. Not bad, but not ideal given his injuries. Now, the client had UIM coverage of $150,000. So, we are now pursuing the additional $150,000. It still will not be enough, but is pretty close to full compensation for settlement purposes. So, the total recovery will be $242,000 out of a possible $250,000 versus $100,000. Clearly, the UIM recovery is preferable.
Why did the client and I accept $92,000 instead of $100,000? Because the fight to get the full $100,000 would have cost an additional $5,000 in expert fees and other expenses and resolving the case against the pickup truck allowed us to move against the UIM insurer. That is helpful because a UIM insurer has a duty of good faith and fair dealing in relation to their insured. In other words, the UIM insurer has to treat you as the insured better than an opposing insurance company. They will still try to lowball you, but there are multiple state insurance laws and bad faith lawsuits outlining how they cannot treat you like dirt, though they want to.