When you buy automobile insurance, you will encounter the term automobile “liability” coverage. In essence, this coverage is designed to provide compensation to OTHERS who are damaged by a car accident that you caused. For example, if you caused an accident, injure someone else, and that injured person files a lawsuit and obtains a judgment against you, then the “liability” coverage under your automobile policy is designed to provide protection for you up to the limits that you purchased. Thus, of course, you would be wise to purchase the highest “liability” limits that you can afford in order to protect your assets.
You will also encounter the terms “uninsured” (UM) or “underinsured” (UIM) motorist coverage. In essence, this coverage is designed to provide compensation to YOU should you suffer damages as a result of other people’s carelessness and they failed to purchase, or purchased very little, automobile insurance to compensate you for your injuries. For example, if someone else caused an accident, YOU got injured, and that person has no or very little automobile insurance or assets, then the “UM” or “UIM” coverage under your own automobile policy is designed to provide compensation to YOU for your injuries up to the limits that you purchased. Thus, of course, you would be wise to purchase the highest “UM” or “UIM” limits that you can afford to protect yourself in case others have inadequate insurance coverage or assets.
Often times, however, most people do not realize, UNTIL AFTER AN ACCIDENT, that their UM/UIM limits of coverage are less than their “liability” limit of coverage. When this occurs, what you have essentially done is short change YOURSELF by buying yourself less insurance protection when you are tragically harmed by someone else’s carelessness and giving others more insurance protection when you tragically harm them.
Why would you provide more protection for others than for yourself? The next time you speak with your automobile insurance representative, it would be wise for you to ask him/her whether your UM/UIM limits are comparable to your “liability” limits.