OII Backgrounder: Q & A ON UNINSURED/UNDERINSURED MOTORIST
COVERAGE
Q. What is uninsured/underinsured
(UM/UIM) motorists coverage?
- Uninsured Motorists-Provides injury coverage to
the insured driver, resident members of your family and
passengers, up to the automobile policy limits, when involved
in an accident caused by the owner or operator of an uninsured
vehicle or a "hit-skip." The named insured and
family members are also covered if they are pedestrians
and struck by an uninsured vehicle.
- Underinsured Motorists-Provides injury coverage
to the insured driver, resident members of your family
and passengers, up to the automobile policy limits, when
involved in an accident when the at-fault driver's policy
limits are less than your underinsured motorist coverage
limit.
Q. Are uninsured drivers a big
problem in Ohio?
There is a wide range of estimates regarding the number of uninsured drivers
in Ohio. Because Ohio has a financial responsibility (FR) law, not a pure compulsory
insurance law, it's difficult to truly gauge the number of Ohioans who are
not complying with the FR law and are therefore considered uninsured. However,
based on Ohio's random verification program for FR, since program inception,
11.4% of Ohio motorists receiving requests for FR have been found in noncompliance
with the law.
Q. Is UM/UIM insurance coverage
required to operate a vehicle in Ohio?
If you choose to comply with Ohio's Financial
Responsibility law through insurance the only coverage requirement
by law is auto liability. The current minimum liability limits
to satisfy the law are: bodily injury liability, $12,500
per person and $25,000 per accident; and property damage
liability, $7,500 per accident.
Bodily injury liability protects you, up to the dollar amount
stated in your policy, against the financial consequences
of a loss arising from injury to someone from an automobile
accident for which you are legally to blame. Defense costs
are in addition to the limits of liability.
Property damage liability is similar to bodily injury liability
coverage, except that it protects you against a claim for
damage to another automobile or other property, in an accident
for which you are legally liable. The protection is again
up to the amount of insurance you purchase. Defense costs
are in addition to the limits of liability.
Since some irresponsible drivers may choose to ignore the
FR law, the inclusion of UM/UIM auto insurance coverages
is strongly recommended.
Q. Is UM/UIM coverage expensive?
To some, it might prove to be an economic strain. But when you consider the
out of pocket costs if you were involved in a crash with an uninsured motorist,
it might prove to be a worthwhile investment. Since hundreds of companies
write auto insurance in Ohio, the premium for this coverage is fairly competitive.
The range is usually 5-10% of the auto policy premium, averaging around $50
a year. This will depend on such factors as the number and types of vehicle(s),
driver(s) insured and the levels of coverage selected.
Q. What does the new law regarding
UM/UIM coverage actually do?
Senate Bill (SB 97) becomes effective on October 31, 2001. It was backed by
a broad spectrum of auto insurance consumers faced with increased costs and
limited availability of UM/UIM insurance. Sponsored last spring by Senator
Scott Nein (R-Middletown), and supported by Governor Taft and the Ohio Department
of Insurance, it restores stability to the UM/UIM insurance marketplace.
This bill removes the mandate requiring insurance companies
to offer UM/UIM coverage. It was this mandatory offering
clause that served as the basis of several Ohio Supreme Court
decisions that increased UM/UIM costs, while limiting its
availability. Prior to passage of this bill, a number of
major insurance companies stopped writing new business and/or
increased auto insurance premiums as a means to cover the
additional claims exposure resulting from UM/UIM rulings
of Ohio's high court.
Q. Since insurers will no longer be required
to "offer" the coverage starting October 31, will UM/UIM
coverage still be made available?
Yes, insurance companies and agents will continue to offer this coverage. None
of the other auto insurance coverages currently offered carry an "offering" mandate.
So UM/UIM coverage will be offered to consumers in the same way that all other
auto insurance coverages are currently offered.
Q. What if I don't want to purchase
UM/UIM coverage?
This is an optional coverage. You have a choice as to whether or not it's a
coverage that you need. As with all insurance coverages, it's important to
discuss the pros and cons of UM/UIM coverage with your insurance professional
before making a decision.
Q. Are there any other changes
in the law with SB 97's effective date?
Besides the mandatory offering of UM/UIM coverage being eliminated effective
October 31, other provisions of SB 97 include:
- Permitting exclusions in UM/UIM coverage under an employer's
commercial auto insurance policy when the employee is not
acting within the scope of employment
- Limiting policyholder UM/UIM claims to a three-year period
- Monitoring of the UM/UIM market by the Ohio Department
Insurance and reporting on its status to the General Assembly
within two years of the bill's effective date
Q. As an insurance consumer, will
my coverage actually be affected by the UM/UIM law change
on October 31?
Most consumers will not see any visible changes in the way this coverage is
offered. Insurance companies and agents are obligated to provide consumers
with information on the various auto insurance coverages available. You choose
coverages and limits that best suit your specific needs.
|
