Excess Uninsured/Underinsured Insurance Coverage and Why You Need It

Car insurance is mandatory in Massachusetts. But there are always a few that think the laws don’t apply to them. Ever stop and think what would happen if you were in a car accident with an uninsured/underinsured motorist?  Excess Underinsured or uninsured motorist insurance coverage can help pay for car repairs and medical expenses after an accident involving someone who’s underinsured or worse, totally uninsured.

Car Insurance is Mandatory, Why Do I Need Uninsured Driver Coverage?

The law in Massachusetts states that all drivers must maintain the minimum limits of car insurance. As a result, Massachusetts has one of the lowest rates of uninsured drivers. However, there are a small percentage of Mass drivers that risk fines and penalties by driving uninsured. A 2015 study by the Insurance Research Council found that,

6.2 percent of drivers in Massachusetts have either let their insurance lapse or do not carry any auto insurance. (1)

While the chance is remote of experiencing an accident with an uninsured driver, the chance exists. Many more Massachusetts drivers fall into the category of being underinsured.

Minimum Massachusetts Car Insurance Limits Are Not Adequate

Massachusetts law requires all drivers to maintain car insurance coverage for:

  1. their own personal injuries,
  2. for injuries they may cause to other drivers,
  3. for injuries caused by a driver with no insurance (uninsured) and
  4. coverage for any damage caused to property belonging to others.

Current Massachusetts Minimum Coverage Limits for auto insurance are 20/40/5. The first two numbers refer to bodily injury (BI) liability limits and the third number refers to property damage (PD) liability. These numbers represent the maximum amount your insurance company will pay as a result of a car accident you cause. So in Massachusetts drivers are required to have $20,000 per person for injuries, $40,000 will be paid out for injuries total per accident and $5,000 per accident will be paid for the damage you do to the property of others.

We Recommend Carrying Higher Than Minimum Limits

The minimum limits for car insurance in Massachusetts will not fully protect drivers from out-of-pocket expenses for most accidents. !n 2019, the National Safety Council reported that the average economic cost for a car accident in which a death occurred was $1,410,000, the average cost where a person was severely injured (nonfatal) was $98,400 and the average property damage per vehicle was $4,600.(2)

If you are found at-fault in an accident and the limits on your auto policy have been exceeded, you are legally obligated to pay for any remaining damages. It’s easy to see how carrying only the minimum state requirements could leave drivers paying significant out of pocket costs for medical payments, lost wages, litigation costs, and more, in the event of a major accident on the roads.

McSweeney & Ricci Recommends Higher Auto Limits and Excess UM/UIM Umbrella Coverage

You may think it’s only natural for an insurance agent to recommend higher car insurance limits and purchasing an additional excess umbrella policy, as it represents increased premium. However, our primary goal is always to make sure our clients are fully protected for any possible risks. As a general rule, you should purchase enough liability insurance coverage to protect all your assets if you are found at-fault in an accident.

McSweeney & Ricci recommends purchasing $250/500/250 car insurance liability limits as well as additional protection in the form of an Excess Personal Umbrella Policy.

Consider The Following Claim Scenario:

A driver is texting and collides with a Tesla SUV carrying a family of four. The father driving the SUV sustains multiple injuries and one of the children was also injured. The texting driver is found at-fault, and the case results in a verdict for $1,500,000. If the at-fault driver carries the minimum MA limits (20/40/05), the maximum amount his insurance is obligated to pay for injuries is $40,000, leaving him responsible for the remaining $1,460,000 million dollars in damages out-of-pocket. The at-fault driver doesn’t have the financial resources to come up with the remainder of the settlement, leaving the family of four with significant medical expenses.

Even if the at-fault driver in the above scenario, had the highest auto limits it would be insufficient to cover the resulting verdict. This is where an excess personal umbrella policy would come into play.

car accident

What is an Excess Personal Umbrella Policy?

A personal umbrella is an extra layer of protection that kicks in after your other insurance policy limits have been reached. The highest available liability limits for car insurance are typically 250/500/250.

In the above claim scenario, if the family of four had UM/UIM limits of $250/$500/$250, as well as $1M of UM/UIM coverage from a personal umbrella policy, they would be able to recover the $40,000 from the at-fault driver as well as the remainder of the judgement from their own insurers.

Excess UM/UIM from a personal umbrella pays after the auto policy’s UM/UIM limits have been exhausted. (3)

Are Increased Auto Liability Limits And A Personal Umbrella Affordable?

These days every time you turn on the TV there are commercials from large national insurers promising cheap rates for car insurance. Many people don’t realize the low rate offered in these ads, refers to minimum liability limits. Purchasing only the state minimum could result in significant financial difficulties and jeopardize your and your family’s lifestyle after an accident.

Increasing your auto liability limits and purchasing a personal umbrella will cost more than bare minimum insurance. However, taking these steps can result in savings if you do experience an accident. And adding a personal umbrella to provide excess UM/UIM coverage is more affordable than you might think.

A $1 million dollar umbrella policy can cost less than $300 annually.

In today’s litigious society, even a small accident could result in a lawsuit with a large financial judgement against you. The value of purchasing higher liability limits and an umbrella is the peace of mind they afford you and your family in the event of an accident. Your dedicated McSweeney & Ricci Account Manager will assess your level of risk and ensure your liability limits are sufficient to keep you protected.

When it comes to insurance, you need more than a great price. You need advice. Since 1964, McSweeney & Ricci has offered trusted advice and affordable home insurance, car insurance, business insurance and more.

To find out if your auto liability insurance limits are enough to keep you protected, adding a personal umbrella or any other insurance coverage, contact us at (844) 501-1359.





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