Under-Insured in Michigan

Under current Michigan insurance law, all persons who own an automobile operated on Michigan streets and highways must carry liability insurance.  Liability insurance provides an available source of payment to a person seriously injured or killed as the result of a driver’s negligence.

The Problem

When the mandatory liability insurance requirements were adopted we were living in a different economic time.  The law, when passed many years ago, required that the limits of the liability insurance be a minimum of $20,000.  At the time of the adoption of the $20,000 limit of liability requirement, $20,000 was quite a bit of money.  Unfortunately, the legislature has yet to require an increase in the required liability insurance.  As a result, there are many persons driving on our streets and highways who have insurance coverage of only $20,000.  If that person gets drunk and kills or maims you or a member of your family the total insurance that you would be able to recover from the negligent driver’s insurance company would be $20,000.  Persons with bad driving records (DWIs/many traffic offenses) can frequently only get insurance through the high risk insurers such as Titan Insurance which will commonly write such minimal coverages.  As you can also imagine, such persons are frequently uncollectible if a judgement is obtained in excess of the minimum insurance coverage.  For instance, if you were seriously hurt by the drunk driver referenced above and proceeded to take a judgement for $500,000 for pain, suffering and excess work loss you would receive $20,000 from the negligent driver’s insurance company and be left with a $480,000 uncollectible balance owed on the judgment.

The Solution

Most insurance companies now offer coverage called under-insured motorist coverage.  This coverage, which is usually relatively inexpensive, is coverage you purchase for yourself and your family as a safety net in the event calamity strikes you or an insured family member as the result of negligence of another driver and the negligent driver has minimal liability insurance.  In the example above, lets assume you have purchased $500,000 of under-insured motorist coverage and the driver that negligently injured you only has $20,000 of insurance coverage and no assets.  Using this example you could pursue your own insurance company for under-insured motorist benefits up to $480,000.

If you do not already have such coverage, you should contact your agent about purchasing such coverage. If you have only minimal under-insured motorist insurance coverage, you may consider increasing the coverage.  Such coverage is generally reasonably priced and if needed, can be very, very important to you and your family.

For more information, please contact Gary C. Rogers at Fraser Trebilcock, (517) 377-0828.

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