“Added on” or “Reduced By” Uninsured Motorist Coverage?
§ 33-7-11 - Uninsured motorist coverage under motor vehicle liability policies
The above referenced Georgia law was put on the books in 2010 making an immediate impact on how insurance consumers purchase uninsured motorist coverage, as well as, how insurance carriers resolve uninsured motorist auto claims. Auto policies in Georgia now are required to present consumers with various options with regards to this coverage, but let’s talk about the heart of the impact of this legislation. When a motorist breaches a driving duty and causes you to incur expenses to pay for an injury and/or property damage, that person is responsible to pay for your the damage to repair your vehicle, as well as, any medical bills associated with that accident. If the at-fault motorist has no insurance or carries the state’s minimum liability limit of $25,000 then that’s where your Uninsured Motorist coverage comes into play. Makes perfect sense, right? In our example, let’s say the at-fault motorist’s policy has the state minimum liability limit of $25,000 and your UM coverage limit for Bodily Injury is $50,000. Let’s also say that the cost of your medical bills and lost income will exceed the at-fault party’s $25,000. Prior to this law, the amount of payout from your own carrier’s Uninsured/Under-insured Motorist coverage would have been offset by the at-fault party’s liability limit. So, in our example, you have access to $50,000 of UM coverage, however, that amount is off-set or “Reduced By” the at-fault party’s $25,000. This law allows you to select, at the time of purchase, if you’d like to have your available UM limits “reduced by” the at-fault party’s liability limit or “Added On” to your UM coverage limit. Back to our example. You have $50,000 in UM coverage, “Reduced By” the at fault party’s $25,000 liability limit, then you are back to square one and only have $25,000 available to cover expense. Whereas, if you “Added On” the at fault party’s liability limit ($25,000) to your UM coverage limit ($50,000) then you now have access to $75,000 to resolve your injury claim.
There are other limit and property damage deductible decisions to be made at the time of purchase, which your agent should carefully discuss and guide you through, but hopefully this sheds a bit more light on your policy’s “Added On” or “Reduced By” option.