Uninsured Motorist Coverage: The difference between “Added on” and “Reduced”

In Georgia, when you purchase an automobile insurance policy the policy must offer Uninsured Motorist Coverage. Uninsured Motorist Coverage protects you in case someone without car insurance hits you. If another driver injures you and they don’t have car insurance then you would have to sue them to get your medical bills paid. The problem is that most likely if that person does not have car insurance then they probably don’t have any money to pay your medical bills either. In that case you are out of luck!

But fortunately, Georgia statute now requires insurance company to offer Uninsured Motorist Coverage in all polices they sell. The statute that requires this coverage can be found at O.C.G.A 33-7-11. When you buy your insurance you should always tell your agent that you want Uninsured Motorist Coverage.

Now, the catch! Insurance companies don’t like to sell you Uninsured Motorist Coverage because they don’t make any money on it. They are forced to provide it by statute. So when you buy your car insurance policy they will ask you if you want to “waive” the Uninsured Motorist Coverage and save about $20 per month on your insurance bill. If you initial the waiver then the coverage is gone. You save $20 per month but what happens when that driver with no insurance hits you? You are basically left with the medical bills and it could bankrupt you. Is that worth saving $20 per month?

The next trick by the insurance companies is the creation of “add on” or “reduced” Uninsured Motorist Coverage. What does this mean? Well, “added on” coverage means the insurance company will pay you for your damages in addition to the at-fault driver’s liability coverage limit up to your “Uninsured Motorist- Added on Coverage limit”

You say huh? This is difficult to understand but what it means is that if the guy that hits you has $25,000 in coverage and you have a $50,000.00 Uninsured Motorist Policy then your total coverage to pay your medical bills is $75,000.00, (his $25,000.00 and your $50,000.00 added on to his for a total of $75,000.00). Not too bad. But once again, the insurance companies have found a way to save money by selling you a “reduced” Uninsured Motorist Policy. This means that they will reduce your policy by the amount of the other guy’s policy. So if he has $25,000.00 and you have $50,000.00 then you will get his $25,000.00 but ONLY $25,000.00 from your policy because they will reduce your $50,000.00 down to $25,000.00 which is the amount of the other guy’s policy. So basically, you lose out on $25,000 and the insurance company saves money.

So when you buy your policy there will be an option for “add on” that you MUST select or you will get stuck with “reduced” by default. The agent rarely tells you about this and most people don’t know to ask. Tricky huh?

I can’t tell you how many of our clients, that we have represented in an automobile accident have no idea what coverage they have or even understand the difference. So when they are hurt and need expensive medical treatment, they learn the hard way that they either “waived” their Uninsured Motorist Coverage completely OR their agent did not explain that they could have selected “add on” Uninsured Motorist Coverage. Instead they are really left under insured because most driver’s in Georgia only carry the minimum $25,000.00 in coverage which is never enough to pay for the medical bills of a serious injury.

When you go to renew your policy, tell your agent that you WILL NOT waive your Uninsured Motorist coverage and will WANT “add on” coverage NOT “reduced.” Don’t let them talk you into save a few bucks a month and take the risk that you will be hit by an uninsured driver and not have coverage to pay your medical bills.