You just got into a car accident with an uninsured motorist. Your car is severely damaged. You file a claim with your insurance company and notice that your collision deductible is $1,000.00. You also notice that you have uninsured motorist coverage with only a $250.00, deductible. Can you use your uninsured motorist coverage instead of the collision coverage?
It’s Your Choice: Texas Insurance Code, Section 1952.107
Texas Insurance Code, Section 1952.107 provides that a person who has collision coverage and uninsured motorist coverage may choose which coverage to use as primary. This is a little known provision that your insurance company will rarely tell you about. Why? Because, they want you to pay the higher deductible that usually comes with the collision coverage.
Simply put, collision covers your car when you are involved in an accident. It will pay for the cost of repair or the value of the car if it is totaled. Additionally, it is considered “no-fault” coverage. This means your insurance company must pay for the damages regardless of who is at fault in the accident.
Collision coverage has a deductible. It generally starts at $250.00, but can go as high as $1,000.00, or more. What deductible you choose is your decision. Of course, the higher the deductible, the cheaper the premium. But, the higher the deductible, then the more money you have to pay out of your pocket when the repairs are completed.
Uninsured Motorist Property Damage (UMPD) Coverage.
This coverage work just like typical uninsured motorist coverage for bodily injuries. It will pay for the damages to your vehicle under two conditions. First, the other vehicle must have been uninsured. Or, maybe the vehicle is insured, but the driver is not insured, such as an excluded driver. Either way, the driver is considered an uninsured motorist.
Second, the accident must have been the other driver’s fault. Unlike collision coverage, uninsured motorist coverage is predicated on the other driver being at fault.
Choosing Which Coverage to Use.
Back to our previous example. If you’re involved in an accident that was not your fault and the other driver was uninsured, look at your policy. You might have a $1,000.00, deductible for your collision coverage. But you might only have a $250.00, deductible for your UMPD coverage.
If that is the case, tell your adjuster that you wish to file the claim under the UMPD coverage. Your adjuster might try to say that you cannot do so. If this happens, point them to Section 1952.107 of the Texas Insurance Code.
Some Things to be Aware Of….
When you are deciding which coverage to use, you also need to consider a few things. First, if you choose to use your uninsured motorist instead of the collision coverage, the claim may be re-assigned to another adjuster. That is because an investigation of the accident has to be completed. The adjuster will have to determine who is at fault for the accident.
Second, the adjuster will have to confirm that the other driver is uninsured. This may take some time. Usually, these matters can be verified in a few days. But it could take longer depending on the complexity of the accident, waiting for the police report, and confirming with the other driver or his insurance company that there is no coverage.
What if the Damages are More Than the Coverage Limits?
Then both coverages may be used to pay for the repairs. You may choose which coverage is primary and which coverage is secondary. For instance, the minimum coverage required in Texas for UMPD is $25,000.00. If the cost of repair or total loss value is more than this, then you can use your collision coverage to pay for the excess.
Let’s say your car is totaled in an accident with an uninsured motorist. If your car is worth $30,000.00, then your UMPD will pay $25,000.00, and your collision coverage will pay the remaining $5,000.00.
How are the Deductibles Handled if You Use Both Coverages?
Essentially, you will pay the deductible for the coverage you designate as primary. If the deductible of the secondary coverage is equal to or lower than the primary coverage, then you will not have to pay any more deductible even if you use both coverages.
However, if the deductible for the secondary coverage is higher than the primary coverage, then you will only owe the difference. You do not have to pay the combined total of both coverages. You will only have to to pay the higher of the two deductibles even though you may use both coverages.
So, back to our prior example. Let’s say your UMPD deductible is $250.00, and your collision deductible is $1,000.00. If the uninsured motorist coverage pays the limit of $25,000.00, and the collision owes another $5,000.00, you will only owe an additional $750.00, in deductible payments. You do not have to pay the combined total of $1,250.00, even though you used both coverages.