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  • Writer's pictureTaylor Burnham

UM Coverage: Motorist Claim Rates Impact - Burnham Law Firm

Updated: Nov 3, 2023

Attorney in conference room advising his clients about insurance documents.

Uninsured motorist coverage, also known as UM, is a type of coverage provided by your automobile insurance carrier that protects you when you've been involved in an accident with a hit-and-run or an uninsured driver. By law insurance companies must offer UM coverage to you as a policyholder, and all drivers must carry UM coverage except for these two circumstances:

1) the policyholder rejects UM coverage via handwritten or electronic signature, or

2) the policyholder expressly selects "economic-only" UM coverage.

Economic only UM coverage will not cover "pain and suffering" and "emotional distress" damages (i.e., non-economic, general damages). It will only cover medical bills and lost wages, things that are easily calculable and supported by documents and ledgers. Hence, when you select economic only instead of regular UM, your premium will be lower because there is less exposure for your insurance company (i.e., they don't have to pay for non-economic, general damages). Sidenote, I do not recommend selecting economic only coverage.

In Louisiana, insurance companies that advertise as low cost carriers (Bluefire, GoAuto, Safeway) write and sell policies with rejected UM coverage. This is certainly legal, but it explains why some insurance companies are able to offer policy premiums at much lower costs compared to their competitors. Many drivers do not realize that they are driving around without UM coverage until they've been involved in an accident. If you're not sure whether you have UM, check your policy declaration's page today!

Should I file a uninsured motorist (UM) claim even when I'm not at fault for an accident?

When you've been involved in a wreck you typically do not think about filing a claim against your own insurance company. You weren't at fault, so why should you, right? Well generally speaking, it is advisable to set up an uninsured motorist claim with your own insurance company. And if you were driving someone else’s vehicle, it’s advisable to set up a UM claim with that vehicle’s insurance company. And if you were driving someone else's vehicle but you also have your own auto insurance, it's advisable to file UM claims with both insurance companies: your personal insurance company and the insurance company for the vehicle you were driving.

It’s in your best interest to do this for two reasons: (1) to know what insurance coverage is available to you for a loss; and (2) to be one step ahead if there turns out to be a problem with the at-fault vehicle's insurance coverage.

There is a litany of reasons why an insurance company can deny coverage after a wreck. (This is also why you should call 9-1-1 and demand a police report after any wreck.) For instance, insurance companies will deny coverage for nonpayment of premiums. Though on paper it could look like a driver has active insurance (they show you a piece of paper with insurance info on it), in reality their insurance company could have terminated their coverage due to nonpayment.

Excluded Drivers

Secondly, an insurance company can deny coverage where the at-fault driver is an "excluded driver." An excluded driver is someone that is prohibited from driving a vehicle. Under the terms of the policy contract, there is no coverage for that driver if they cause a wreck.

An excluded driver is often times someone like a teenager or a person with a record of DWIs, someone if listed on the policy would cause the premiums to increase significantly. Importantly, if you get hit by an excluded driver the loss will not be covered. This is when you will need your UM coverage to protect you.

Uninsured vs. underinsured motorist coverage

Underinsured motorist coverage is controlled by the same rules as uninsured motorist coverage. The term “underinsured” specifies the coverage situation where the at-fault driver carried liability insurance coverage, but that coverage was insufficient to cover your damages. For example, let’s say you are involved in a wreck where four people get hurt and they suffer damages valued at $10,000 each. But the at-fault driver only has a $30,000 liability (fault) policy. In this case, the at-fault driver would be "underinsured" $10,000, and all parties would have a viable underinsured motorist claim.

Will filing a UM claim make my rates go up?

If you were not at fault for the accident, no. Generally speaking, your car insurance rates can go up if: (1) you cause a wreck; (2) you are partially responsible for causing a wreck; or (3) fluctuations in the insurance market (e.g., inflation, car part price increases). But an insurance company cannot increase your premiums just because you file a UM claim. See the Louisiana statute below:

La. R.S. 22:1284. Motor vehicle insurance; consideration of nonfault incidents prohibited

A. No insurer shall increase the rate, increase or add a surcharge, cancel, or fail to renew any policy of motor vehicle insurance when such action is based on consideration of one or more nonfault incidents.

B. In this Section, "nonfault incident" means an accident, collision, or other incident involving a vehicle covered by a policy issued by the insurer in which the driver of the insured vehicle was not at fault, regardless of whether the incident was reported to any law enforcement agency.

If you've been involved in a wreck or have questions about uninsured motorist coverage and whether you should be setting up an uninsured motorist claim, contact the Burnham Law Firm for a free consultation at 504-358-0008.

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