Used Car Dealerships: Behind the Wheel with High Uninsured/Underinsured Coverage
The Insurance Research Council (IRC) estimates that 14% of drivers across the U.S. do not carry auto insurance even though it’s mandated in most states. This, unfortunately, means that if you’re driving and are in an accident with an at-fault uninsured motorist you would have no third-party recourse to pay for medical expenses if you were injured unless your policy includes Uninsured/Underinsured Motorists(UM/UIM) insurance.
Uninsured Motorists/Underinsured Motorists coverage provides protection for a person injured due to the negligence of another driver who has no or inadequate liability insurance. The coverage also protects you when you’re the victim of a hit-and-run accident where the owner or driver of the other vehicle can’t be identified. You will be paid for medical bills, lost wages and pain and suffering up to the limit of the policy. It’s recommended that you carry high UM/UIM insurance – equal to your Bodily Injury Liability limits on your auto policy – due to staggering medical costs that can add up quickly in a serious accident and significantly dent your financial wellbeing.
But whathappens when you or one of your family members are driving one of the vehiclesfrom your used car dealership for personal reasons. The car has dealer plates and tags on it and you, your wife or son or daughter while running errands get into an accident with an uninsured or underinsured driver. You have a personal auto policy in addition to carryinga commercial auto policy for your used car dealership. Would you have coverage to pay for medical expenses for injuries suffered by you or a family member as a result of the accident?
The answer is yes if you have UM/UIM coverage on the policies. But it’s critical that an insurance agent coordinate the coverage limits that are carried on both your personal auto policy and the dealership’s commercial auto policy.These limits not only need to be coordinated, but again, they also should be high enough to help pay for medical expenses, lost wages and pain suffering should a serious accident occur. Even if the third-party at-fault driver has insurance, he or she may not have enough. The minimum liability coverage for passenger cars and small private trucks varies from state to state, but those minimums generally range from $15,000 to $30,000.This is a drop in the bucket if you or your family member has a serious injury, huge medical bills, is unable to work for any significant period of time, and can only collect minimum amounts from the at-fault driver.
Protecting Your Employees, Too
As a used car dealership, you also want to properly protect your employees who drive your vehicles for work-related purposeswith high Uninsured Motorists/Underinsured Motorists liability coverage. You may think this isn’t necessary because on-the-job accidents or injuriesan employee suffers would be covered under Workers’ Compensation. But if one of your employees was injured while driving one of the dealership’s vehicles due to the negligence of another driver (a third party), in most states your employee is entitled to damages under your Workers’Comp policy AND under the other driver’s liability insurance policy. Unlike Workers’Comp benefits, which only pay a portion of an injured employee’s lost wages (and nothing for pain and suffering), the third party’s liability insurance will pay all the employee’s lost wages, and an amount for pain and suffering. If your employee receives Workers’Comp benefits and also gets compensation from the third party’s liability insurance, the employee will most likely have to reimburse the Workers’Comp. Since Workers’Compensation benefits don’t include pain and suffering, and only pay two-thirds of lost wages, the injured employee can keep the award for pain and suffering and any amount in excess of the partial wage payments. But what happens if the third-party is uninsured or underinsured? Then the employee can look to your Commercial Auto policy’s UM/UIM coverage for pain and suffering and to make up for the portion of the employee’s lost wages not covered under Worker’s Comp.
Given all the uninsured on our roads along with the number of drivers who only have the minimal financial responsibility coverage limits required in their state, adequate Uninsured/Underinsured Motorist insurance should be part of every used car dealership’s insurance program.
For more information about the need for proper UM/UIM insurance limits, contact NEIDA member Brian Lawlor at 860.777.2671 at BOLT Insurance, specialists in protecting used car dealerships throughout the U.S.