Uninsured or Underinsured Motorists Coverages in Auto insurance

3.03.2021
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Introduction

As a responsible driver, it is required to have auto insurance to protect yourself in case of an accident. But not everyone is so scrupulous. The Insurance Information Institute states that 13 percent or one in eight drivers is uninsured. Getting into an accident with one of those drivers can be an expensive mistake, especially if you rely on the insurance of other drivers to cover your costs. To resolve these circumstances, uninsured and underinsured motorist insurances are there. Most of the time these two types of insurances are bundled together. In this blog, we will discuss a little more about the uninsured or underinsured motorist’s coverages in auto insurance.

What is Uninsured Motorist Coverage?

Uninsured motorist coverage is a part of an auto Insurance policy that helps to pay your medical expenses or car repairs if you were hit by a motorist who doesn’t have car insurance.

Typically, when a person engages in an accident and the other driver is found to be at fault, the auto liability coverage of the other driver would help to pay for the medical bills or repairs to the person’s car. But if the at-fault driver doesn’t have any car insurance, the person has to pay out of his own pocket for those expenses. That’s where uninsured motorist coverage comes into play. It can be better understood by the following example:

Suppose, you get into an accident resulting in medical bills and other repair expenses totaling $20,000. Generally, a claim for $20,000 could be filed from the at-fault driver’s bodily injury liability coverage. In this case, if the other driver is uninsured, you have to tap into your uninsured motorist insurance coverage. So long as your coverage limit is more than $20,000, you should be able to retrieve all losses.

What does Underinsured Motorist Coverage mean?

When somebody has an accident that is not his/her fault, and the other motorist does not have enough insurance(liability insurance coverage) to cover the damages, underinsured coverage kicks in. Once a claim is filed by you, your insurer contacts the other motorist’s insurance for payment. If the other motorist did not carry enough insurance to cover your expenses sufficiently, the underinsured coverage would satisfy, up to the coverage limit of your policy.

For instance, suppose you have medical and auto damages totaling $20,000. The other driver has an insurance policy that covers only $10,000 as liability coverage. You can claim the balance against your insurer up to the limit of your coverage policy. You can not demand more than the actual costs you have had as a direct result of the occurrence.

What Does Uninsured or Underinsured Motorist Insurance Typically Cover?

The requirements for Uninsured or underinsured coverages may vary as per states or the insurance providers. Some states require Uninsured/Underinsured motorist bodily injury coverage only, while Uninsured/Underinsured motorist property damage coverage is optional. In other regions, both are either optional or obligatory.

Either individually or together, these coverages may expensive add-on to an auto insurance policy, but provide beneficial coverage. The following four types of coverages are grouped under uninsured and underinsured motorist insurance:

  • Uninsured motorist bodily injury (UM or UMBI) — It pays for the medical bills when an at-fault uninsured driver causes a car accident.
  • Uninsured motorist property damage (UMPD) — It covers the damage to your car if it is hit by someone without insurance. Some states also allow you to use UMPD to cover hit-and-run accidents.
  • Underinsured motorist bodily injury (UIM or UIMBI) — It helps to pay when another driver causes a car accident but they do not carry enough liability insurance to cover all your medical bills, lost wages, etc.
  • Underinsured motorist property damage (UIMPD) — It covers the damage to your car if it’s hit by someone who does not carry enough liability insurance. This coverage pays the remaining balance after the liability insurance of the other driver, up to your coverage limits.

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