Last month, the Insurance Research Council (IRC) released its estimated percentages, by state, of uninsured motorists. The findings show the recession has increased the number of uninsured motorists on our nation’s roadways and the numbers do not appear to be abating as the recovery begins. Five states where highlighted as having the highest risk--but nationally, there are a staggering one in seven uninsured motorists.
Independent agents can do their clients a tremendous service by asking them to consider the risk of not protecting themselves against uninsured motorists. Some agents might be surprised how easy it is to provide high limits and cost-effective protection using a personal umbrella policy.
As you can see in the graph below, the exposure to uninsured motorists faced by anyone driving, walking or riding a bike in the top five states is significant. If you are rear-ended in Mississippi, there is an almost one in three chance the driver will have no insurance coverage. The probability falls off in the next four states, but only to one out of every four drivers. Interestingly, Florida is in the top five, and with about 80 million non-Floridians visiting the state each year, many more people are exposed to high levels of uninsured motorists, even if from a state with a low percentage of uninsured motorists. For a complete listing of percentages of uninsured motorists by state, see this link.
As independent agents, your personal lines staff should know it is easy to provide protection against the risk of being hit by an uninsured motorist. Also, tell your clients that there are many more underinsured motorists with drivers only purchasing minimum limits like $25,000 per person, $50,000 per accident for bodily injury and $10,000 for property damage (this is a typical state minimums, but states vary; state limits are available from the Insurance Information Institute). The good news is your staff can help insureds solve the underinsured problem at the same time.
Most insureds do not familiarize themselves with insurance policy details. Even if someone is familiar with the risk, most clients will be unaware of the ability to purchase high limits of uninsured and underinsured motorist. According to David Hulcher, AVP of Agency E&O Risk Management at the national Big “I,” “You do your clients a huge favor by pointing out the need for purchasing higher limits of UM/UIM and sharing the IRC figures with them definitely makes that point.” According to Hulcher, by using an E&O coverage checklist, such as the one available on the Big “I” Virtual Risk Consultant, not only will you protect yourself against a leading cause of agency E&O claims—failure to offer coverage—but you will also bring to the client’s attention the risk of no liability coverage in the event of a major injury. Hulcher recommends agents routinely use coverage checklists and ask clients to purchase umbrellas with excess UM/UIM offered as optional coverage. He notes by asking for the umbrella order and recommending UM/UIM as an add-on, an agent will address the underlying and excess UM/UIM limits, provide the opportunity to educate clients on a big risk, protect against agency E&O claims and increase agency revenue at the same time. “Of course, any time you offer coverage and it’s declined, document, document, document the customer file,” he said.
The good news for independent agents is coverage in readily available. Most agents with typical markets for personal lines will be able to place high limits of UM/UIM with the same insurer that writes the person’s auto, home and umbrella. An excellent example is Travelers. In a recent rate filing for several Travelers companies in Tennessee (one of the top five UM/UIM exposure states), the filing shows up to $5 million in excess UM/UIM can be purchased, and the added cost is about $100 for $1 million per car and $200 for $5 million per car.
For situations where the insured is with disparate underlying insurers or the umbrella carrier on the primary does not have excess UM/UIM (not all are like Travelers in Tennessee), Big “I” members have an excellent alternative. Long-time company partner RLI now offers $1 million of excess UM/UIM coverage in every state with every personal umbrella policy. “RLI added this coverage based on the advice of the Big “I” state associations concerned about making this coverage easy to access for every member,” said Becky Lundberg, AVP RLI Specialty Markets. “Excess UM/UIM is an important coverage to many insureds and to the producers selling personal umbrella policies, and as a result it was important to RLI to provide a solution.”
The Big “I” approached RLI with the concern of both giving member agents the ability to provide UM/UIM to a wide variety of situations, and RLI responded. Lundberg indicates average acceptance rates since the roll-out are running about one in 10 on renewals but expectations with agents educating clients and the exposure continuing, that percentage will increase.
But do pedestrians and bikers to recognize their exposure to uninsured, underinsured and hit-and-run accidents? Check out next week’s IN&V, for a look at the accident rates for pedestrians and bikers by state to help you convince some insureds of the value of high limits of UM/UIM.
Paul Buse (paul.buse@iiaba.net) is president of Big I Advantage® and a licensed p-c agent. For more information on access to personal umbrella and excess UM/UIM, go to www.iiaba.net/umbrella or log in to www.bigimarkets.com. For information on coverage checklists that include questions about personal umbrellas and UM/UIM, go to www.iiaba.net/vrc.
