California uninsured and underinsured motorist coverage is deceptive. There is a good chance even your insurance agent doesn’t clearly understand how it works. And you almost certainly need more of it than you currently have.
The reason? Your UM/UIM insurance coverage is “non-stacking” — in other words, it only gives you coverage up to a combined total maximum benefit of your policy limit.
A rational person would expect that having $30,000 in UM coverage would mean you have an additional $30K, after you’ve used up the other driver’s policy limits (this is called “stacking”). But that’s not the case. Instead, your insurance is allowed to deduct the other driver’s policy limits before they pay you anything.
How does this work in real life?
Let’s say you get into a crash. The other driver has a $15,000 policy limit. You have $30,000 in UIM. You would expect this to mean you have a combined total of $45,000 available.
But in reality, you have much less. You get $15,000 from the other driver, and then your insurance deducts that amount from your policy. So you have no more than $15,000 available from your own insurance. Your grand total: the UIM policy limits of $30,000.
Tricky? Yes. Deceptive? Absolutely. Legal? Unfortunately.
How to protect yourself? Get more insurance.
As much as it pains me to recommend giving money to insurance companies, the best way to protect your family is to have as much UM/UIM coverage as you can afford. You need at least as much as your liability limits.
If there is any area of your coverage to not skimp on, this is it.