Agents Understating Uninsured Motorist: An Embarrassment To My Industry!

I have spent 30 years defending an insurance industry that occasionally engages in activities that make it difficult to do.  The latest embarrassment is a little trick being used by Captive Agents when writing an auto insurance policy. When quoting an unsuspecting customers’ auto insurance they remove Uninsured Motorist Coverage (UM); a very important coverage that leaves a gaping hole in your coverage.

How they do it:  

They convince you that Uninsured Motorist Coverage (UM) is not needed if you have health insurance. To protect themselves they have you sign a state-required form acknowledging that you wanted the coverage removed. That’s right, the coverage is so important that the State of Florida requires you to sign a special form. The agent downplays the significance of the form saying that its only purpose is to protect them.

What is Uninsured Motorist Coverage (UM):  

UM protects you financially if you are in an accident with someone who is found at fault, and either has no insurance or insufficient insurance. Uninsured Motorist Coverage pays what you are legally entitled to recover from the “at fault” party.

Why Uninsured Motorist Coverage is so important:  

The benefits provided by Health Insurance, Personal Injury Protection, Med Pay, and Disability are substantial. There are expenses not covered under those policies that would be covered by UM. Remember, UM pays what you are legally entitled to recover from the “at fault” party. Oftentimes, the payout awarded by a court includes things that none of the earlier referenced policies cover.

Some damages that are not covered by health insurance: 

Pain & Suffering – Future lost wages – Future medical bills – Special Equipment, such as Vans, Wheelchairs, and your home remodeled for handicap accessibility. As well as, Services provided in-home, such as in-home nursing, lawn care and home maintenance – Loss of Enjoyment in Life.

Why they do it: 

There are only two reasons why any agent would remove this coverage.  1. Removing coverage makes their policy appear to be more competitive.  A Captive Agent represents only one company, they cannot shop numerous companies for you to find the best fit.  2. The agency is having Loss Ratio problems and is under pressure from their one and only company to be profitable.

Uninsured Motorist coverage is not the cheapest coverage for a reason. It can drive an insurance companies loss ratio up.  Uninsured Motorist claims are frequent as only 1 in 4 drivers in Florida carry liability insurance and the losses tend to be large, easily topping $100,000.