Should Alabamians have Uninsured or Underinsurened Insurance Coverage?


In Alabama, like most other states, Insurance companies are required by law to offer uninsured or underinsured (also known as UM/UIM) motorists coverage. You will only not have this coverage if you opt out of it. Unfortunately, many people opt out of this coverage and don’t even know it.

First of all, what is UM or UIM insurance? This is insurance coverage that will pay if you are hit by another driver who doesn’t have insurance or where they don’t have enough insurance to cover your injuries. You must first exhaust the other person’s insurance before you can tap into your own insurance. The cost to have this type coverage is only a few dollars a month for a minimal policy of $20,000 or $25,000.

Why would someone opt out if this coverage? Most people opt out of this type coverage without even knowing they are doing so. In order to do so, you must expressly in writing agree to that you are waiving UM/UIM coverage in your policy. Typically, we see clients who, when buying auto insurance, told their agent that they wanted to cheapest policy available, not knowing that this would opt then out of this important insurance. While some good agents will explain UM/UIM coverage and why they wouldn’t want to waive it, many do not. The person buying insurance is given a stack of papers to sign without explanation and many don’t read through what they are signing. (To be honest, I don’t know many lawyers who read all of what they are signing. The papers are very complex, single spaced, and in small print. And, if you want to purchase an insurance policy you’ll have to sign.)

However, we believe it is not a good idea to waive UM/UIM to only save a few dollars a month. If you are injured through the fault of another who doesn’t have insurance the results can be devastating. For example, if you were hit by someone and that caused you to be out of work for 2 months, and if you have UM, you could make a claim for lost income on your own insurance. Otherwise you would be out that money with no recourse.

We highly suggest your purchase this coverage. And, if for some reason you decide you do not want it, make sure you understand exactly what you are giving up and make sure your agent has explained it to you.

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