Uninsured Motorist coverage protects an insured who suffers bodily injury in an accident caused by a motorist who does not have liability insurance or by a hit-and-run driver who cannot be identified. Subject to policy limits, uninsured motorist coverage will pay, the insured the amount that could have been recovered from the at-fault driver if that driver had carried applicable liability insurance, or in the case of a hit-and-run accident, the amount that could have been recovered if the at-fault driver or auto were identified.

Underinsured Motorist coverage is similar in that coverage applies in the case of an accident caused by a motorist who has an insufficient amount of coverage to indemnify the insured.

Most all states mandate uninsured/underinsured motorist coverage, that is, insurers are required to offer UM/UIM coverage but insured's are not required to purchase it. New York first offered uninsured motorist coverage on a voluntary basis in 1954; and the state of New Hampshire adopted legislation in 1957 that mandated UM/UIM coverage be a standard feature of every auto policy. Since that time, every state has enacted some sort of legislation for protection from uninsured/underinsured motorist.

When UM coverage was introduced, one common endorsement was used for commercial carriers regardless of the state of coverage. However, as the common endorsement was challenged in state specific cases, separate state-specific endorsements were developed. One significant change was the addition of underinsured motorist coverage as this gap was challenged in court. Uninsured motorist property damage was also attached to the uninsured motorist endorsement to further protect the insured. UMPD coverage provides up to $3,500 on the repair or replacement of the insured’s vehicle when the insured carries liability and uninsured motorists coverage only. If a vehicle that is not insured for physical damage is damaged as a result of an uninsured motorist, the insured’s policy would then provide up to the $3,500 limit for repairs or replacement.

Should business owners purchase uninsured/underinsured motorists coverage?
Ordinarily, in states without no-fault insurance, the insurance of the at-fault party in the accident will cover the costs of bodily injury. If the at-fault party doesn’t have insurance or enough insurance to cover his/her legal liabilities, UM/UIM will cover insured’s employees AND any passengers.

Will UM/UIM coverage duplicate coverage under other policies?
Workers’ compensation will cover employees for injuries sustained in any work-related auto accident, so UIM might duplicate some coverage. However, workers’ compensation would not cover any non-employee passenger in a company-owned vehicle, nor does it cover pay and suffering, mental anguish or general damages.

Even if the insured’s company policy prohibits the use of company-owned cars for personal business, you never know when an employee will have a passenger in the car. For this reason, it is in the best interest of the business owner to include this important coverage.


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