Navigating Uninsured/Underinsured Motorist Coverage: Essential Considerations for Business Owners

Authors: Matt Meyer, Practice Group Leader – Construction, and Katie Richmond

As a business owner, your fleet represents a significant investment. Protecting your employees and vehicles from unforeseen circumstances is crucial, and uninsured/underinsured motorist (UM/UIM) coverage plays a vital role in that protection. With so many variables to consider, navigating the world of UM/UIM coverage can feel like driving through a maze. This article offers three key considerations to help you make informed decisions about this essential insurance:

1. Do I need UM/UIM coverage? (And how much is enough?)

In many states, UM/UIM coverage is not mandatory for businesses. However, considering the prevalence of uninsured and underinsured drivers, it’s highly recommended to invest in this protection. Here’s why:

• Uninsured drivers lurk everywhere: Statistics reveal that one in eight drivers nationwide lack insurance, leaving you exposed to significant financial losses in case of an accident.
• Underinsured drivers pose a hidden threat: Even if the at-fault driver has insurance, their coverage might not be enough to cover your losses, especially when dealing with major accidents or injuries. These losses include but are not limited to, the high cost of repairing and/or replacing today’s vehicles or the negative financial impacts due to lost productivity.
• Peace of mind is priceless: UM/UIM coverage acts as a safety net, shielding your business from the financial burden of accidents caused by irresponsible drivers. This allows you to focus on recovery and minimize disruptions.

Choosing the right limits:

The ideal UM/UIM limit depends on several factors specific to your business:

• Fleet value: Consider the combined replacement cost of your vehicles. Higher limits ensure adequate coverage for all.
• Potential medical expenses: Think about the average medical cost associated with accidents in your area. Higher limits can safeguard you and your employees from hefty medical bills.
• Risk tolerance: Assess your comfort level with potential out-of-pocket costs. Opting for higher limits minimizes financial exposure if an accident occurs.

Remember, choosing higher limits typically translates to a higher premium. Carefully evaluate your risk tolerance and weigh it against the added expense. Consult with your insurance provider to assess your specific needs and find the optimal balance between coverage and affordability.

2. Do I need to insure my personal vehicles separately?

It’s important to keep in mind that the insurance coverage is tied to the vehicle. Therefore, if you own personal vehicles that are not included in your company’s fleet, you need to insure and determine a UM/UIM limit for those vehicles separately. However, if all the vehicles you have are vehicles insured under your corporate policy and you potentially could drive other vehicles, such as rental cars, you should consider adding Drive Other Car coverage to your corporate policy.

3. Fleet size, location, and safety measures: your risk profile

Beyond the basic coverage question, several factors influence your overall exposure and, consequently, your UM/UIM needs:

• Number of vehicles: The more vehicles you have, the greater the potential for encountering uninsured/underinsured drivers. Consider this when determining your coverage needs.
• Geography: UM/UIM rates can vary significantly based on your location. States with higher uninsured motorist rates typically have higher premiums.
• Safety measures: Implementing proactive safety protocols like driver training, vehicle maintenance programs, and telematics systems can potentially lower your risk and influence your insurance rates.

Additional considerations:

• Explore the availability of stacked UM/UIM coverage, which combines your bodily injury and property damage limits for added protection.
• Understand the deductible associated with UM/UIM claims and factor it into your decision-making process.
• Stay informed about changes in your state and the states where your business operates UM/UIM regulations to ensure you maintain adequate coverage.

By carefully considering these factors, you can make informed decisions about UM/UIM coverage and empower your business to face the road ahead with confidence and financial security. Remember, being proactive and prepared is key to navigating the complexities of fleet management and ensuring the smooth operation of your business.

Remember:

• Consult with a qualified insurance professional to discuss your specific needs and receive personalized recommendations.
• Regularly review your UM/UIM coverage limits to ensure they remain adequate as your fleet or business circumstances evolve.
• Don’t underestimate the value of UM/UIM coverage. It’s a crucial investment in protecting your business from financial hardship caused by irresponsible drivers.

This article provides a brief overview of UM/UIM coverage for business fleets. However, it is important to remember that the specific considerations and recommendations may vary depending on your unique situation. Always consult with a qualified insurance professional to receive personalized advice tailored to your business needs.