The snow is flying, and there is a bite in the air. At this time of year, many people in Kelowna think about spending time down south. For some, it is just a week’s break in their busy work schedule, for others it involves spending several months in the sunshine. A few winters ago, I travelled by car to the southern US. When we crossed into Texas, we were greeted with a billboard that said “One in 5 motorists do not have insurance”. That made me glad we had purchased excess under insured motorist insurance from ICBC.
The primary reason you insure your car is to obtain third party liability insurance. This insurance provides indemnification to the owner and driver of a vehicle, should it be involved in an accident that is the driver’s fault. Injured people, whether they are pedestrians, bicyclists, passengers in the vehicle, or occupants of another vehicle, may bring an action against the driver and owner of the ‘at fault’ vehicle, to claim compensation. If the court makes an award against the at-fault driver and owner, the insurer pays that judgement to the limits of the third party insurance you have purchased. In British Columbia it is mandatory to carry third party liability insurance on all vehicles. The minimum limit you can buy is $200,000.00, but you can purchase up to $5,000,000.00 of coverage.
What happens if you or your family members are injured in a car accident, and the at-fault driver does not carry any or sufficient third party liability insurance? For example, you are travelling in Texas and one of those uninsured motorists crosses the centre line and hits your car. You and your passengers can sue that person for compensation, including your medical costs, your past and future lost wages and for your pain and suffering. Collecting any award, though, may be completely fruitless. If the at-fault motorist does not have insurance, or carried minimal insurance, it is unlikely they have any assets which you can seize to pay the judgement. Luckily in British Columbia, all of our insurance policies automatically come with under insured motorist insurance, known as “UMP”, to a limit of $1,000,000. There are various deductibles from that $1,000,000, however it does provide that if there are no, or insufficient limits of insurance held by the at-fault driver, your own policy with ICBC, will pay the shortfall on that judgement to a total award of $1,000,000. This insurance applies in Canada and the United States, but does not apply in any other country, including Mexico.
$1,000,000 sounds like a lot of money to many people. However, if you are young, have a good job and a long work life ahead of you, $1,000,000 may not go very far, especially if your injuries prevent you from working. If you are seriously injured and have to spend a lengthy time in an American hospital, the medical bills can be very expensive. $1,000,000 may not be much, if you have to pay those bills and all of the care and aids (such as wheelchairs, prosthesis etc.) when you return home. You can protect yourself by spending just $25 and buy excess UMP coverage. This increases the limits of the UMP, by an additional $1,000,000, so you have a total maximum coverage of $2,000,000. A good use of $25 in my mind, particularly if you travel anywhere in Canada or the US, where there may be a significant number of under insured motorists, some of whom might change your life one day by causing an accident. Talk to your insurance agent if excess UMP makes sense for you.
The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.