Protect your customers and yourself by offering uninsured/underinsured motorist coverage.

As many as 13% of all U.S. drivers are uninsured, according to the Insurance Research Council. That percentage varies state by state, with the highest percentage of uninsured drivers found in Florida where 26% of driver are uninsured.

Often, it is the worst drivers who are uninsured because their driving record pushes their premiums to levels they cannot afford. Uninsured drivers put the livelihood and financial stability of law-abiding citizens at risk. The solution is uninsured motorist coverage.

All states but New Hampshire have a minimum required amount of coverage a driver must carry to legally operate an automobile. However, these minimum limits have not kept pace with the rising cost of inflation.

Florida, for instance, only requires $10,000 of coverage for property damage and $10,000 of coverage for personal injury. Meanwhile, California requires $15,000 in coverage for personal injury and only $5,000 for property damage. These state-mandated limits are not nearly enough to cover a serious auto accident.

Roughly, 40% of states allow drivers to stack uninsured/underinsured motorist coverages. In those states, a policyholder can multiply their UM/UIM coverage by the number of autos they insure, which is an important feature of the auto policy in states that allow stacking. However, except in Rhode Island, insurance carriers are allowed to prohibit stacking policies and agents need to make sure they are offering a stackable policy if the state allows.

Another twist is uninsured motorist property Damage (UMPD), which is available in 15 states. An additional eight states require it. Traditional UM/UIM coverage includes medical bills, pain and suffering, and lost income damages to a driver and their family members in their auto or another auto, as well as passengers in the covered auto. UM/UIM coverage does not cover damage to your auto. UMPD coverage will pay for uninsured or underinsured property damage resulting from an accident.

While many see UMPD as a duplication of collision coverage, it is much cheaper than collision coverage and usually carries a lower deductible. UMPD is an excellent alternative for older or lower value autos, especially if the customer wants to drop their collision coverage.

Agents should always offer limits that match the liability limits of the customer. In fact, some states require a customer to sign a rejection form if they choose less coverage than the liability limits they carry. Moreover, don't forget the umbrella coverage. Make sure to offer matching UM/UIM limits on any umbrella policies you place.

UM/UIM limits will never be an errors and omissions issue until you have a customer who is badly injured in an auto accident. That is why it's best to make sure you document that you offered the coverage and note any higher limits that are rejected by the customer to protect your agency from an E&O claim.

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James Redeker is vice president and claims manager at Swiss Re Corporate Solutions and works out of the office in Kansas City, Missouri. Insurance products are underwritten by Westport Insurance Corporation, Kansas City, Missouri, a member of Swiss Re Corporate Solutions.

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group ("Swiss Re") and/or its subsidiaries and/or management and/or shareholders. Copyright © 2018, Big "I" Advantage, Inc. and Westport Insurance Corporation. All rights reserved. No part of this material may be used or reproduced in any manner without the prior written permission from Big "I" Advantage. For permission or further information, contact Agency E&O Risk Manager, 127 South Peyton Street, Alexandria, VA 22314 or email at eo@iiaba.net.

Almost 15% of the total claim count comes from Personal Auto coverage claims.
(Enlarge Chart)

Source: Advance Claims - Swiss Re Corporate Solutions Claims Data source

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Free Risk Management Webinar: Join our Free January Agency Risk Management Webinar:"Let's Talk Limits" 

Everyone knows the story of Goldilocks, and her struggle to find the porridge, the chair, and the bed that was "just right." When it comes to limits of liability, it's often said that the highest limit is best but in practice, agents must help their clients settle on the amount that is "just right" for the situation at hand.

How can you ensure your approach to limits is correct? Do you feel confident that proper policy limits are in place for your clients? Do you worry about whether your own agency is appropriately protected? When your customers are under-insured, it creates claims against your agency. When your agency is under-insured, it limits the defense your carrier can provide.

Don't let the fear of a large claim keep you up at night. Take action by joining Big "I" Professional Liability and Swiss Re Corporate Solutions for an Agency Risk Management Essentials webinar:

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During the hour-long webinar, Swiss Re Corporate Solutions panelists Matt Davis, claims manager and Mark Shackelford, senior underwriter, will discuss how to approach choosing liability limits for both your clients and your own agency. The webinar will feature scenarios for you take into consideration and provide lessons learned from a claims and underwriting perspective.

This webinar series is offered by Big "I" Professional Liability at no cost as an exclusive Big "I" member benefit. Big "I" members in good standing may register unlimited attendees from the member agency to attend. No CE is received for this session.

If you have any questions please contact Pam Andrews.

Big "I" Professional Liability offers these free quarterly risk management webinars as an exclusive Big "I" member benefit. A collection of risk management resources, including articles, checklists and webinar recordings, is available on the E&O Happens website. Log in with your Big "I" username and password to check it out.