By Irene Morrill, CPCU, CIC, ARM, CRM, LIA, CRIS, CPIW — VP of Technical Affairs
An agent asked if I had a good explanation as to why selling Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage in the Personal Umbrella policy was a good idea. My short answer was, “Because it directly benefits your client and protects their financial future and lifestyle!” But that wouldn’t really be a sufficient reason for most clients, and it’s good to know the importance of coverage in the underlying policy, also.
It All Starts with High Bodily Injury Limits
I believe in “selling security,” and that’s what high-limit Bodily Injury (BI) and Property Damage (PD) protection does. When an unintended incident arises, and someone who “didn’t get out of your way in a timely fashion” gets seriously injured and sues you, the stress and fear of losing your assets, lifestyle, and future can be as unbearable as the accident itself.
When people ask how much insurance is enough, I always say, “I don’t know.”
I suggest a Personal Umbrella Policy (PUP). Then it’s easier to address coverage and limits under the underlying policies such as home, auto, rental properties, boats, recreational vehicles, etc. – which are required to qualify for an umbrella policy. You can give quotes on varying liability limits on PUPs, and the prospect can then decide for themselves “how much insurance is enough” when they don’t want to spend any more money! I would never tell someone how much insurance is enough for them, because I am not clairvoyant. But I can provide information on the importance of coverage, and offer limit and pricing options.
I always roll my eyes at the commercial where they say, “Only buy what you need.” What the heck does THAT mean? If I were never going to have an incident/ accident/ occurrence, then I wouldn’t need much insurance, would I? However, since I can’t predict the future, I have to choose a limit today for something that I might need tomorrow to protect the rest of my life!
I do tell people that MY reasons for buying high liability limits were to:
- Safeguard my future
- Keep my assets/possessions
- Protect my paycheck so I could give my kids a “better life” and education
- Keep my paycheck from being attached
- Keep insurance carrier defending me so I won’t incur the cost of defense
- Compensate the victim or victim’s survivors – so I will hopefully feel less badly about the incident
- Be able to buy high UM and UIM limits on my auto policy.
I tell people that buying high liability limits is “all about them.” They can protect their future by buying insurance, and can get a convenient monthly payment plan to do it!
UM/UIM Coverage When Others Don’t Make the Same Informed Insurance Buying Decisions as You Do
In most states, including Massachusetts, you cannot purchase a higher limit for UM/UIM than you buy for BI on your auto policy. I believe in purchasing high UM/UIM limits as much as I believe in purchasing high BI/PD limits.
I explain to clients that not everyone makes the same intelligent decisions as they do when purchasing high BI/PD limits to compensate the victims in an at-fault accident. Some people simply can’t afford high liability limits. Some people make bad decisions because they don’t KNOW what they need. And some people just don’t care, because they have no assets, paycheck, or career to lose. I suggest to clients that they shouldn’t leave their future in the hands of another, and that buying high UM/UIM is “all about them.”
Does the bank care why a mortgage payment isn’t paid? Colleges want to be paid. Children have goals and desires that might need a little financial help. If you are seriously injured, or worse, killed in an accident, will your disability or life insurance be enough?
Remember, UM/UIM coverage can provide dollars to:
- Safeguard your future.
- Pay bills so car, house, etc. will not be repossessed or foreclosed.
- Provide money to meet new health expenses and physical needs.
- Ensure that the future goals and dreams you have for your family will be met.
I can buy as much insurance for me when I am the “victim” in an accident as I do when I’m the “perpetrator.” (I’d buy MORE if I could.)
UM/UIM and the Personal Umbrella
I used to believe that I bought my PUP for others; for the victims who don’t get out of my way, whether auto or personal activity-related. I live in New Hampshire, and it is required that the PUP offer UM/UIM coverage. I had always declined.
About 30 years ago, I was teaching a class on the Personal Umbrella Policy at a NH location. I mentioned how I rejected the UM/UIM coverage option because I “thought” the purpose of the PUP was providing BI/PD to others. An agent raised his hand and leaned back said, “Well Irene, I have been in the insurance industry for 30 years, selling predominantly personal lines.” He mentioned that his agency had had three PUP claims. (I thought to myself, well THAT’s excessive, but kept my mouth shut.) He said that all three of those PUP claims were UM/UIM claims. I was STUNNED! That did it for me. I called my agent the next day and told him to add UM/UIM coverage to my PUP, and I have been paying the additional premium ever since.
I buy a multimillion-dollar PUP limit. If I buy that much coverage to compensate others – why not myself, too! When I teach auto insurance, I always say that people who want to buy less UM/UIM than BI have “self-esteem” issues! The same goes for coverage under the PUP.
I believe in the 3=5=12 guideline. That is, Part 3 (Uninsured Motorist coverage) should equal Part 5 (Optional Bodily Injury) should equal Part 12 (Underinsured Motorist Coverage). And all these limits should be “wicked high”! If you can buy coverage for yourself in your own umbrella – go for it! Massachusetts does NOT require that the PUP policy offer UM/UIM coverage, but some companies do allow it. RLI does allow it.
Buying a PUP that allows the purchase of UM/UIM is the best thing a client can do. Both coverages/ policies are all about protecting one’s OWN future and lifestyle!
I believe I am more likely to be the “hittee” (the victim) than to the “hittor” (at-fault perpetrator). In an accident where I am a victim, UM/UIM under my auto policy pays first. UM and UIM payments include medical, funeral, lost wages and “pain and suffering.” If the UM/UIM coverage under my auto is not sufficient, then I will access the coverage in my PUP.
If I’m seriously injured, I am going to get the BEST personal injury lawyer in my jurisdiction because I’m getting EVERY DIME out of my auto, and then PUP, that I can get. I’ve been paying for the coverage in both my auto and umbrella policies, and I will get the full extent of limit to which I am entitled. I’m worth it and so is every client!
That’s what insurance is for.
Please remember that part of MAIA service is answering questions and providing information. Please feel free to email me when you have a coverage question, problem, or issue. Perhaps I can help at firstname.lastname@example.org
This article has been developed expressly for the members of MAIA.
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