The most under-appreciated insurance coverage in all of trucking

If we don’t have this coverage, or if we choose to purchase only the minimum of this coverage, we won’t realize the mistake until it's way too late.

A recent customer claim has solidified my opinion that's it's important to never overlook or trivialize any of our insurance coverages. My customer was driving their truck and their spouse was a passenger. (Passengers were and are permitted in the vehicle.) There was an incident involving another vehicle. That other vehicle is believed to be a personal car. The actions of that other vehicle are believed to have led to the very sad and unnecessary death of the passenger and spouse of my customer.

The other vehicle, the car, fled the scene and the police are searching for this vehicle.

When we complete an insurance application either physically, electronically or over the phone with an agent, eventually we must choose our Uninsured Motorist/Under-Insured Motorist (UM/UIM) coverage amounts. All too often, I have customers tell me one of several things. Typically they sound something like this: “I need to save money so only give me what I need” or “I only want what’s required” or “Just give me the minimum so I can get my business started.” While most of us -- and yes, myself included -- can well relate to keeping insurance premiums as low as possible, UM/UIM is the one coverage we should never decline or only purchase the minimum available.

[Related: Insurance premium refunds: Know your rights]

UM/UIM is never fully appreciated until it’s needed. Frequently though, because the insured desires to save money, they either request and purchase the minimum amount of coverage or decline the coverage altogether. Tragically, this money-saving decision can prove to be financially devastating when the worst happens. Most everyone knows and understands what Uninsured Motorist coverage is -- it pays our medical expenses, up to the limits of our coverage, when we are in an accident and the other driver is at fault (liable) but has no insurance. However, what’s typically not understood by most insureds is Under-Insured Motorist coverage -- this coverage also pays medical expenses, up to the limits of our coverage, when the other party in the crash is liable but doesn’t have enough liability insurance to pay all of the bodily injury expenses for which they are liable.

If you, like me, have been in and around trucking for 40-plus years, no doubt you’ve witnessed firsthand and/or heard about some horrific accidents. Cars and trucks versus other cars and trucks in all kinds of scenarios: truck versus truck head-on at full speed; trucks avoiding other cars, accidents or road hazards; and of course all kinds of single-vehicle accidents. The vast majority of such accidents required some type of emergency services, such as an ambulance ride and a visit to the hospital ER. Way too often those accidents will even require the services of an air ambulance in an effort to save someone’s life. As we are all aware, these accidents frequently lead to surgery (sometimes multiple surgeries), extended stays in the hospital, physical therapy and sometimes even more.

Point being, as I have personally experienced myself, the investigation oftentimes reveals that many of these accidents involving a truck are the fault of another driver in a personal vehicle.

When that other driver is 100% at fault for an accident with us, they are liable for all damages (bodily injury and property) they have caused us. According to the news release dated March 22, 2021 from the Insurance Research Council, one in eight drivers are uninsured. In that same news release, the national average of uninsured motorists in 2019 countrywide was 12.6%. Even worse, the news release points out that 6 states have 20% to 29.4% uninsured motorists among all drivers there, while 26 other states have from 10% to as high as 19.9%. For anyone to assume that they will never have to use UM coverage is both naive and very risky. 

[Related: Don't over-insurance your trucking business: 3 coverages you likely don't need as an owner-operator]

Now what if that other driver, who is at fault and liable, does have insurance? In many states minimum coverage for a personal car is $25,000 worth of bodily injury per person. That means the other driver’s insurance policy will only pay up to $25,000 for each person’s bodily injury he/she is liable for. In addition to the $25,000 per person coverage, personal auto policies typically come with a $50,000 limit of coverage per accident. Most of the personal auto insurance policies I see have these amounts of coverage. If there happened to be three people in an accident all with $20,000 worth in bodily injury expenses that such a driver is liable for, none of those three injured parties will have all of their bodily injury expenses paid, because the total of $60,000 worth of expenses exceeds the per-accident limit of coverage.

To bring it full circle, lets first look at just some of the cost ranges associated with bodily injury claims. All but one of these amounts were provided to me by my representative from one of the insurance companies I write policies for:

1. Ambulance ride -- $400 to $15,000
2. Air ambulance flight -- $28,000 to $97,000 (as reported by NPR on Sep, 26th 2018)
3. Hospital ER -- $3,000 to $20,000 or more
4. Surgery -- varies depending on the procedure, anywhere from $50,000 to $250,000 for the same procedure in some cases
5. Follow up surgeries -- Reasonable to expect the same as the initial surgery
6. Hospital admission -- Once a patient gets admitted the bills can get really expensive, especially if there is time spent in an intensive care unit

It is painfully clear how bodily injury costs could rapidly soar to $250,000-$300,000, or even exceed $500,000 or more almost in an instant. It’s then also easy to understand that not having or only having the minimum of UM/UIM coverage could leave most anyone in an unthinkable financial situation at the absolute worst possible time, not to mention the agony of potentially having to make medical decisions based on the lack of insurance coverage, which could have been completely avoidable.

In Commercial Auto Insurance (trucking insurance) there is frequently (but not always, depending on the insurance company) the opportunity to purchase UM/UIM coverage that costs mere pennies for the amount of UM/UIM coverage provided. For example, let’s look at a quote I prepared this week, with $100,000 worth of UM/UIM coverage available at a quoted premium of $87 for the entire year. 

Sounds great, right? Yet given potential cost ranges above, it’s obvious this could leave us hundreds of thousands of dollars short in coverage to pay for all our bodily injury expenses. For that same quote, $1,000,000 of UM/UIM coverage has a quoted premium of $210 for the entire year. That is ten times the coverage for about two and a half times the premium. Why would anyone pass on such a great value and peace of mind!?

[Related: Think before you leap: Plan and prepare before moving beyond just one truck]

For those who operate a small fleet and hire drivers it’s not only a wise decision to maximize your UM/UIM coverage for the above mentioned, but it can be a great business decision, too. The UM/UIM coverage can help to mitigate claims against your workers’ compensation policy. Considering the significant costs associated with workers’ comp premiums, the more proactive we are to control those costs the better. Utilizing the comparatively speaking premium-friendly UM/UIM coverage to provide appropriate levels of bodily injury coverage in the event of an accident where UM/UIM coverage is utilized could thus be one of the best business and insurance coverage decisions that you make.

Finally, back to my customer. When an accident is determined to be the other driver’s fault/liability and that other driver fled the scene, the insured’s UM coverage pays the insured’s bodily injury claims up to the amount of coverage. My insured’s very tragic and sad incident is a reminder to us all to consider carefully if saving a couple of bucks is really worth it when it comes to insurance.

Need help with your own insurance? Call the author of this story, W. Joel Baker -- if you have questions about insurance you'd like to see addressed by Baker here in Overdrive, drop a comment under this story or get in touch with him directly via his websites. 

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Find more information about bedrock business practice, including insurance issues, among a myriad other topics, in the Overdrive/ATBS-coproduced "Partners in Business" manual for new and established owner-operators, a comprehensive guide to running a small trucking business. Click here to download the updated 2022 edition of the Partners in Business manual free of charge. 

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