Tuesday, April 24, 2007

Car Insurance - I Declined on Uninsured/Underinsured Coverage

First let me put all the usual disclosures at the beginning. I am not an insurance person, attorney or a personal finance advisor. This post represents my personal interpretation. Please consult a professional before taking any action.

While I believe insurance is important, one of my wealth building strategies is to avoid getting unnecessary insurance. I currently DO NOT have uninsured/underinsured motorist coverage, because I do not believe it is necessary for me. Here is how I came to the conclusion:

What Uninsured/Underinsured Motorist Insurance Covers

It covers the collision, medical and liability costs of an insured driver or underinsured driver. For example, if an uninsured driver hits your car, the damage to your car and any medical expenses would be covered by this insurance.

Why I Don't Buy The Coverage

I already have good medical insurance.
I currently have $1,000,000 of medical insurance through work. The bodily injury insurance of uninsured/underinsured motorist insurance would be duplicating this coverage.

I own a low value car. Our state requires minimum insurance coverage which would probably covered the totaled value of our cars. If the person is uninsured, then my own collision insurance would cover the damage. In both cases, uninsured/underinsured motorist insurance would be duplicating collision coverage.

I think I should only insure myself. I prefer not to pay additional for someone else's insurance liabilities. I recognize that it may cost me more should I be hit by an uninsured/underinsured driver. However, I am willing accept that risk versus paying $30 to $50 every six months for the insurance.

When I first decided to decline underinsured/uninsured coverage, my insurance company required me to sign a waiver, caused me to be momentarily concerned about dropping a "necessary" coverage. However, I still proceeded and dropped the coverage. Since dropping this insurance, we have been saving about $200 per year and have had only two minor accidents where the insurance of the car at fault completely covered the repairs.

Of course, insurance is a personal decision. If you have low medical insurance limits or you own a very expensive car, it may be worth carrying uninsured/underinsured motorist insurance as a additional insurance.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

Photo Credit: morgueFile.com, Kenn Kiser

This is not financial or insurance advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC

4 comments:

Dimes said...

What about your passengers?

vause said...

I still would like to exchange links with you. Please let me know.

Secondly, this is an interesting post. I never thought about it this way.

vause
www.usactivedutymilitary.blogspot.com

Super Saver said...

Dimes,

Great question.

Uninsured/underinsured coverage stays with the person. So since most people carry uninsured/underinsured coverage, my passengers are covered by their own insurance. If the passenger does not carry the insurance, then they would not be covered, by their own choice just like me.

Confirmed it with my insurance agent today. Not sure if this is the case in all states.

Vause,

Thanks for your comment.

Answered yes to your earlier comment and that I would do it by end of month. Need your age group (20s, 30s etc.) to put you in the appropriate blogroll.

Super Saver said...

Dimes,

Forgot to mention that my passengers would be also be covered by the medical payments part of my car insurance. So even if they don't have their own uninsured/underinsured coverage (e.g. kids), there is some small coverage.