A recent New York Times’ Your Money podcast had an interview with reporter Paul Sullivan about reviewing one’s insurance coverage. I was surprised to hear him saying uninsured motorist coverage in auto insurance is important but it’s expensive. I had to rewind and make sure I heard it right because that is not my experience. I’ve had uninsured motorist coverage for many years and it’s never expensive.
I found the article Paul Sullivan wrote in New York Times: Time for an Insurance Checkup, as Needs and Options Change. The part about uninsured motorist coverage said (bold emphasis added by me):
"Uninsured motorist coverage is another thing to check on your policy. It is pretty expensive — a couple of hundred dollars a year for each $1 million in coverage — but that is because it is meant for your protection against someone without insurance who damages your car or injures you."
I still don’t quite understand. Is it possible he confused uninsured motorist coverage with an umbrella policy?
Unless the article is intended for millionaires with Cadillac policies I haven’t seen, I don’t think uninsured motorist coverage comes in increments of $1 million. The coverage options from the companies I dealt with are similar to those for bodily injury liability: $50,000, $100,000, $300,000, etc. An umbrella policy, on the other hand, typically starts at $1 million and goes up in $1 million increments.
It just so happens my auto insurance is up for renewal. The cost for $300,000 uninsured motorist coverage is a little less than 10% of the total premium. It’s not expensive at all.
For someone with good health and disability insurance, there is duplication in coverage when you buy uninsured motorist coverage. If you are injured by an uninsured driver, your health insurance will pay your health care bills and your disability insurance will pay you if you are disabled. A large part of the uninsured motorist coverage from your auto insurance will be used to reimburse your health and disability insurance company. But at such low cost, I would still buy uninsured motorist coverage just to fill in the gaps and not worry too much about duplication.
Do you have uninsured motorist coverage? Am I just lucky or is it not expensive for you either?