Auto Insurance Laws: How Uninsured/Underinsured Motorist Coverage Is Designed To Protect

April 29, 2011
2012 Honda Civic Hybrid

2012 Honda Civic Hybrid

While you may be a responsible driver and carry the insurance coverage required by your state’s auto insurance laws, other drivers may not. According to a recent study by the Insurance Research Council, as many as one in six drivers are currently driving uninsured in the U.S - a number that’s expected to grow if unemployment rates increase. Adding uninsured/underinsured motorist coverage to your policy can go a long way in helping protect you – and your wallet - from such drivers.     

Uninsured motorist coverage

An uninsured driver carries no auto insurance, not even the state minimum requirements. The driver may also be unknown due to a hit-and-run accident. In either case, if you are involved in an accident caused by an uninsured driver, your own uninsured motorist coverage (UIM) will pay any expenses you incur up to your covered limit.

UIM involves two types of coverage: bodily injury and property damage. Bodily injury pays for any medical bills related to the accident. Once your maximum limit of coverage is met, your personal health insurance kicks in. Bodily injury can also pay for expenses not covered by your health insurance, such as lost wages if you’re unable to work due to the accident and any pain and suffering incurred.

Property damage coverage is beneficial to add to your policy if you don’t carry collision coverage. Should an accident occur through the fault of an uninsured driver, your property damage coverage will pay for repairs to your vehicle. However, if you do carry collision coverage on your policy, it will be used to pay for repairs instead of property damage coverage. While it may seem like an overlap in coverage, UIM property damage is required by some states’ auto insurance laws.

Underinsured motorist coverage

What happens if you’re in an accident with an underinsured driver and he or she is at fault? By being underinsured, the other driver does carry insurance; however, the amount they carry isn’t enough to cover the expenses you and your passengers incur from the accident. This is where your own underinsured motorist coverage (UDIM) comes into play. Your insurance company pays the difference between the other driver’s UDIM coverage and your own. If you don’t carry this coverage, it may be up to you to pay any remaining expenses out-of-pocket. 

Adding uninsured/underinsured motorist coverage to your policy

Uninsured and underinsured motorist coverages are required by most state auto insurance laws. However, many of these states only require you to buy uninsured/underinsured bodily injury coverage (UMBI) or may not offer uninsured/underinsured property damage (UMPD). Be sure to check with your state’s department of motor vehicles or your insurance agent to determine if this coverage is required for you.

If you live in a state where both UMBI and UMPD are available, it may be wise to add both to your policy to keep you financially protected. Also, you may want to consider choosing higher limits than the minimum required under auto insurance laws. Adequate coverage can help minimize your out-of-pocket expenses in the event of an accident.

Adding uninsured/underinsured motorist coverage to your policy can help ensure you’re protected financially should an accident occur due to an uninsured/underinsured motorist. Carry the highest limits of UIM and UDIM you can comfortably afford to reduce your chances of paying any out-of-pocket expenses. Also remember to practice safe driving behavior at all times. Following simple tips to ensure car safety for kids and adults alike can help decrease your chances of an accident.

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