http://jassimlaw.com/blog/do-you-have-enough-insurance-the-importance-of-uninsuredunderinsured-coverage/3/

Most reasonable and responsible citizens carry at least the minimum required liability insurance, if not more than the minimum. The general rule of thumb has been to carry enough liability insurance to cover the value of your assets. While that is a good place start, the reality is that protecting your assets just may not be enough.

Consider this: You carry a $100,000 liability auto policy, with $100,000 UIM (uninsured/underinsured limits). In case you were not aware, you cannot obtain UIM coverage in excess of the amount of your own liability limits.

Now, assume an auto accident occurs and YOU are injured through little or no fault of your own. Your medical expenses are almost 6 figures, and you will need some long term care. The other driver has $50,000 policy limits and no other assets to collect upon.

Under that scenario, your maximum recovery would be $100,000. You could recover the other driver’s maximum of $50,000, plus an additional $50,000 from your own insurance policy.

Unfortunately, $100,000 is not going to cover your expenses in the long term, or possibly even the short term.

Now, for only a couple hundred dollars more per year, you could have obtained a $500,000 or even $1 million liability and UIM policy. Under the previous hypothetical, if you had higher limits you could have recovered $50,000 from the other driver, plus up to an additional $950,000 from your own policy – for a total of $1 million. Now, assume the other driver had the California State mimimum of $15,000. In that case, you could recover $15,000 from the other driver’s policy, plus up to $985,000 from your own policy if your injuries and damages justified a maximum recovery.

So, when you are thinking about purchasing an auto policy, or if it is time to renew, don’t simply consider what limits you need to “cover your assets”, but also consider that you may be faced with the very real possibility of being injured by someone without adequate coverage, or assets. If that happens, you should be prepared with sufficient liability and UIM coverage of your own.

When it comes to your life, and the life of your loved one’s, you do not want to take the gamble that the stranger about to collide with you has the right policy to cover you.