Understanding Uninsured and Underinsured Car Insurance Coverage

When you look at your insurance policy, you may notice that you have uninsured/underinsured motorist coverage. This insurance coverage can be confusing to some drivers, particularly since they are insured and it seems strange to carry insurance for someone that is not. The reality is, however, that this insurance is in place in order to keep you protected from those drivers that are not insured or that have inadequate insurance coverage.

Why Do I Need Uninsured/Underinsured Motorist Coverage?

Uninsured/underinsured motorist coverage is in place to protect you if the person causing an accident does not have proper insurance coverage. With this insurance coverage in place, your insurance company will pay the expenses that should be covered by the liable party. This way, if the person that caused the accident does not have proper coverage, you won’t be stuck with the cost of covering your medical expenses or property damage. If you live in a no fault state, you will probably be required to carry this insurance coverage. Even if you don’t live in a no fault state, however, this coverage is good to have in place.

What Exactly is Uninsured Motorist Insurance?

Although uninsured and underinsured motorist coverage is typically lumped together on insurance policies, they actually serve different purposes. Uninsured motorist insurance is used when the other driver doesn’t have any insurance in place or when the other driver doesn’t have enough liability insurance in place to cover the expenses.

Uninsured motorist insurance generally will pay for the expenses you incur when an uninsured driver causes you to be in an accident. It is also used if the driver cannot be identified or located, such as when you are injured by a hit and run driver, or when the driver has insurance but the insurance company is not financially able to pay the costs.

What is Underinsured Motorist Coverage?

Underinsured motorist coverage is similar to uninsured motorist coverage, but it only pays when the other driver has an insurance policy in place. With underinsured motorist coverage, your policy will pay for your expenses that exceed the limits of the other driver’s insurance policy. For example, you may be injured by someone that is carrying bodily injury liability insurance with a limit of $50,000. If your medical expenses are $75,000, that means you have $25,000 worth of medical expenses that are not covered by that person’s policy. With underinsured motorist coverage, the other $25,000 in medical expenses will be paid by your insurance company.

In an ideal world, you wouldn’t have to carry uninsured or underinsured motorist coverage. Unfortunately, there are many people out there that are not driving with insurance or that simply don’t have enough coverage on their policies. While you can certainly hold those people liable for your injuries and property loss, you may never actually see the money they owe you if they do not have insurance in place. Therefore, by having uninsured and underinsured coverage in place, you can be certain you will get the compensation you need.

Shannon Kietzman is a freelance writer and an authority on car insurance issues. She helps others learn the basics of car insurance so they can make proper and informed decisions when choosing the coverage that is right for them.

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