Considering Uninsured Motorist Coverage?
With increasing insurance costs, drivers are less willing to pay more than what is necessary for car insurance. There has been a rise in cut-rate auto insurance policies that offer a bare minimum of coverage and the increase in these policies are creating a real risk for buyers as well as other drivers. For this reason and the increasing amount of uninsured drivers, you should highly consider including underinsured and uninsured motorist coverage.
Underinsured vs. Uninsured Motorist Coverage
Uninsured motorist insurance is there simply to cover the cost of damages when the driver who started the accident has no auto insurance. This protection is also here to help during a hit and run, which when the driver flees the scene of an accident.
Underinsured motorist insurance works similarly to uninsured motorist coverage. It’s there to protect you from drivers who don’t have automobile liability insurance or who have enough liability insurance to cover all the damages that occur during an accident. But what does that mean?
When adding these coverages to your policy, you will need to assign maximum payout values for bodily injury and property damage. Uninsured bodily injury coverage establishes a ‘per person’ and a ‘per accident’ limit while uninsured property damage establishes a ‘per accident’ limit. These values usually match your liability limits but it may vary from company to company.
How These Coverages Work
Let’s say someone runs a red light and hits your car. The total cost of your claim against their car insurance company is $250,000 to cover hospital bills, lost wages, pain and suffering, and other related expenses. However, the person who hit you has a car insurance policy that will pay out a maximum of $100,000 per person per accident. This means that their insurance will pay that $100,000, but not the remaining $150,000.
So what happens next…?
Am I Covered?
If you have an underinsured motorist insurance clause in your car insurance policy, then your car insurance company will pay out. These levels are typically the same coverage levels as your liability insurance, but this can vary so consult your car insurance policy or discuss this with your local agent.
Let’s say you have coverage limits of $100k/$300k for bodily injury and liability. In that case, as we previously mentioned, your underinsured motorist insurance typically pays out with matching coverage levels. Now, you still have that $150,000 worth of medical costs that need to be paid. The underinsured motorist insurance clause of your car insurance policy will pay an additional $100,000 to you for those expenses as per your liability coverage limits. That is how your underinsured motorist insurance works.
Wait, that leaves you with a remainder of $50,000 worth of bills. What are your options to get those bills paid?
What to Do if Your Insurance Doesn’t Cover All Costs
In some cases, your insurance, even combined with the insurance of an underinsured driver, may not be enough to pay all your bills. It’s rare, but it can happen if you drive an expensive vehicle or if you have unusually high hospital bills. At this point, your primary option is litigation against the liable (or responsible) driver, suing them for the remaining cost of your expenses.
In a situation where you are the at-fault driver, paying out of pocket is likely your only option. We highly recommend speaking to an attorney specializing in auto insurance law in either case to discuss all options available to you and it’s especially recommended to hire an attorney any time you are involved in a motor vehicle accident that results in either you or another party becoming injured.
Is Uninsured Motorist Coverage Right for You?
If you want to compare rates on policies that have underinsured & uninsured motorist coverage included, then start our quote process below. We will match you with multiple companies to help you find the best deal. Compare it to your current rates and choose the insurer that best suits you. It’s that simple.