Q: Why purchase uninsured motorist/underinsured motorist umbrella coverage when medical insurance—less deductibles and copay—would cover such a loss? What else would a person be able to recover from either of these coverages?

Response 1: Consider these three examples: 

• A driver with modest liability limits hits a van carrying a young family, killing the mother and a child. The second child is paralyzed from the waist down; the third child is rendered quadriplegic. Both paralyzed children are preschool age.
• A young business owner is severely injured in an accident with a driver who carries minimum liability limits. The business owner is unable to work for months, incurring large medical rehabilitation-related expenses that are not covered by health insurance. The business manages to survive, but diminishes significantly. Thirty years later, the business owner is still limited by his injuries. 
• An honor student suffers catastrophic brain injury in an accident. After a seven-figure medical expense and exemplary care over several years, the student can function at only a marginal level as an adult.

Response 2: UM/UIM coverage pays what a tortfeasor's liability should pay. In addition to medical bills, the at-fault party could owe for pain and suffering, lost wages, and other non-medical losses.

Response 3: Damages from UM/UIM coverage would pay far more than medical expenses, including the injured party’s loss of income and derivative damages, such as loss of consortium. I have seen more than one multimillion-dollar UIM claim. 

Response 4: UM/UIM coverage pays medical expenses not covered by medical insurance, including deductibles, copays and excluded procedures and treatment. UM/UIM also covers pain and suffering, lost wages, disability and other expenses.

Think of it as a third-party liability policy in terms of the scope of coverage. If someone hit you while you were in your car, on your bicycle or as a pedestrian, you would have broader recovery under their personal auto policy than you would under your own medical insurance.

UM/UIM coverage is similar, but it is attached to your own policy to protect you when the other party has either no insurance or lower limits than you need.

Response 5: An umbrella policy is designed to increase the limits provided by underlying policies. It is not designed to provide basic coverages provided by other policies.

Response 6: Medical insurance does not cover pain and suffering, loss of consortium, disfigurement or other general damages. UM/UIM coverage pays what the insured could legally expect to recover from an uninsured or underinsured motorist.

Response 7: UM/UIM coverage is essentially liability coverage that the at-fault driver didn't have, or didn't have enough of. It pays more than just medical expenses—it can also cover loss of consortium, pain and suffering, loss of income, and, in some cases, punitive damages. Remember, too, that some health policies exclude auto accidents.

Response 8: Pain and suffering along with mental anguish, and don't forget lost wages if workers comp does not apply. UM/UIM coverage would also address loss of consortium from the passing of a loved family member. At the very least, offer this coverage to the client and obtain a signature from both spouses if they decline. Otherwise, your errors & omissions insurance will be providing the coverage, less your deductible.

Response 9: If you were injured to the extent that you could never walk again, work or play catch with your child, you would not be satisfied with payment of your medical bills only. That’s the difference between liability and simple medical payments. UM/UIM coverage pays when the driver who caused your injury either has no liability coverage, or has lower limits than your injury warrants.

Response 10: Medical insurance covers only direct medical costs. UM/UIM covers lost wages, impairments, pain and suffering, and certain costs either not covered or limited under medical insurance, such as retraining, rehab and certain living arrangements.

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