In this article, you can learn about:
- What a comprehensive car insurance policy looks like.
- How inflation and changes in the medical field have changed the landscape of necessary coverage.
- Why you can’t choose a UM/UIM policy that exceeds your Liability Coverage in Indiana.
What Are The Car Insurance Requirements In Indiana?
There are multiple coverages in a typical auto insurance policy. They include Liability Coverage, Collision Coverage, Comprehensive Coverage, UM/UIM, and Medical Payments.
When we talk about “minimum limits” in Indiana, we’re talking about Liability Coverage specifically. What is Liability Coverage? It is the portion of your insurance plan that protects other people from accidents that are caused by your negligence while driving.
Without proper Liability Coverage, Indiana law prohibits a vehicle’s owner or operator from:
- Registering a motor vehicle; or
- Operating a motor vehicle on a public highway.
(This does not apply to electric wheelchairs, off-road vehicles, or snowmobiles.)
If you don’t comply with these minimum liability insurance requirements, your driving privileges may be suspended.
So, what are the minimum Liability Coverage requirements in Indiana?
- $25,000 for bodily injury to one person
- $50,000 for bodily injury to two or more persons
- $10,000 for property damage
In Indiana, the limits for Liability Coverage have remained unchanged since they were last increased in the 1980’s or early 90’s. At the time, the limits ($25,000 per person) would pay for quite a bit of medical treatment. Unfortunately, inflation for medical treatment has skyrocketed since then, so these limits often fail to meet the needs of people injured in automobile crashes.
For example, if we apply the medical inflation rate (significantly higher than the consumer inflation rate), a procedure that cost $440 in 1985 would cost $4,124 in 2020. What’s more, there is more medical treatment available today due to the expansion of the field. So more treatment and testing is administered today than was back when these limits were set.
Additionally, the cost of medical transportation is significantly higher than ever before. At the start of this practice 20 years ago, our firm would occasionally see bills for a “Med-Evac” to another hospital range within a few thousand dollars. Today, helicopters are called in frequently and often result in charges from $55,000 to $75,000.
Clearly, the minimum insurance requirements have not kept up with the increases in healthcare costs. So, what amount in Liability Coverage would cover the average driver in 2020? Due to the increase in cost, treatment, transportation, and more – the minimum limits should be increased to $250,000 per person and $500,000 per accident just to cover the same amount of medical care.
What Does Uninsured Or Underinsured Motorist (UM/UIM) Coverage Actually Cover?
There are a couple of things to understand when we talk about UM and UIM insurance…
First is the terminology.
UM stands for “uninsured motorist.” UM insurance provides coverage when you are physically injured by a negligent driver who does not have liability insurance.
For example, consider the following situation: Someone runs a traffic signal and broadsides you. As a result, you have massive trauma to your left side, including a sprained knee, a shoulder tear, and sprains to your neck and back.
If the other driver didn’t carry Indiana’s minimum liability coverage, you could tap into your UM insurance to cover your damages. (Note: This doesn’t only include medical expenses – but provides coverage for pain and suffering, as well. )
UIM is “underinsured motorist coverage.” It applies to situations where the negligent driver does have liability insurance, but the limits of coverage are lower than your actual damages.
To illustrate this, let’s continue to use the example above – where another driver disregards a traffic signal and broadsides you.
If that person actually had insurance, but only at the state minimum limits, the most you can get from their policy would be $25,000 for your treatment and injuries. If you were to have the same injuries we described in the last example, the treatment (such as surgery, injections, etc.) for shoulder tear alone would likely exceed this amount. So how would you get all of your damages covered in a UIM claim? If you need treatment for neck and back injuries, you will likely need coverage for things like:
- Doctor’s visits
- Physical Therapy
- Chiropractic Treatment
- Missed Work and Lost Wages
- Pain and Suffering
- And more…
In this situation, you can see clearly how the $25,000 available from their Liability policy isn’t going to cover your bills, let alone put any money in your pocket. This is where your UIM policy comes into play.
When your damages exceed the liability limits of the negligent driver’s insurance policy, that person is said to be an underinsured motorist, and your UIM policy will kick in to provide coverage.
It should be noted: The extent of your UIM coverage can be slightly misleading…
Your UIM coverage does not “stack” on top of the other driver’s limits. Instead, it represents the maximum total coverage available to you. So if you have $300,000 UIM limits, your maximum additional recovery will only be $275,000. Likewise, if the other driver had $100,000 liability limits and you had $100,000 UIM limits, there would be no additional coverage.
One of the primary reasons for this is that you cannot legally carry UM/UIM limits higher than your own liability limits. They can be the same, or lower – just not higher. Why? Because if your UIM coverage could stack on top of the other driver’s limits, it would result in more UIM coverage than liability coverage, which is not allowed.
Does Indiana Require Uninsured/Underinsured Motorist (UM/UIM) Coverage?
Indiana does not require UM/UIM coverage. However, the state does require insurance companies to offer it to its customers.
To prove that an insurance company has offered UM/UIM coverage, the law requires that the customer sign a statement that it was offered and has been rejected.
Is UIM Automatically Added To Someone’s Policy, Or Does It Have To Be Requested?
Technically, underinsured motorist coverage is automatically added to your policy. However, you will have the choice to reject it. If you do not reject this coverage in writing, it is presumed and should be a part of your policy.
For more information on Car Insurance Requirements In Indiana, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (812) 359-8007 today.
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