What is Uninsured & Underinsured Motorist Coverage?
In the United States, 87% of motorists have car insurance.
It’s required by law to carry auto insurance, but not everyone does. More than 1 out of every ten vehicles are being driven by the uninsured.
Have you ever heard of underinsured motorist coverage and wondered what exactly that meant?
If you’re in an accident with another motorist, the insurance of the at-fault driver can cover things like hospital bills, car repairs, or replacement. If the motorist who you have an accident with is not insured, you won’t be able to collect anything. The average loss per claim is $4,100. Underinsured means the motorist has liability limits that are too low.
To unpack the meaning behind all of these terms, we’ll take a look at what each means. Remember that each area of insurance uses terms and definitions that apply to that area of coverage. In this way, the terms used in a discussion about home insurance are not going to match those used in auto insurance.
Underinsured Motorist Coverage
Many auto insurance policies offer underinsured motorist provisions to address the problem of drivers with low-level coverage. This is an area of your policy that’s often optional. The provision protects you from financial risks if you’re hit by a motorist who doesn’t have enough liability coverage.
Underinsured motorist provision insurance helps cover the cost of damage. All too often, what’s mandated by law isn’t enough to cover everything.
Car accidents could cost you thousands of dollars if injuries or deaths occurred. If a person has the lowest-tier policy, it’s often not enough to help cover your bills.
A driver might choose underinsurance for several reasons. One of the biggest reasons is that after a vehicle gets paid off, many drivers drop to the lowest level of liability. Often, the older a car is, the higher the chance it’s underinsured.
Uninsured Motorist Coverage
Uninsured motorists are what you would think they are. Uninsured means the person has no auto insurance at all.
In the case of someone having no insurance, you won’t be able to collect any money from their insurance. You can sue them, but that will take a lot of time and stress for what may not be much gain.
That’s why you want to opt-in for uninsured motorist coverage. Uninsured coverage will help you if you’re in a wreck with someone who has no insurance.
It’s worth restating that not having auto insurance when you drive is illegal. It’s not only unlawful, but it is also immoral. You are putting both yourself and everyone else around you at risk with no car insurance.
Financial Liability Coverage
What does uninsured motorist insurance cover? It covers the financial liability of being in a car wreck with someone who doesn’t have insurance. Car wrecks, if they involve deaths, can cause tens of thousands of dollars in damage and medical bills.
Having an underinsured motorist provision means that your car insurance will cover what exceeds the liability limits on the other driver’s auto insurance policy. It’s a way to bridge the gap between what you can get from their insurance and what you need to recover.
The whole reason for motorist insurance, or auto insurance, is to help with the costs of injury or property damage. If you’re underinsured or uninsured, you can cause financial ruin for everyone involved.
Most car accidents don’t cost tens of thousands of dollars, because many of them do not result in injury. Those that don’t will still often result in at least hundreds of dollars in repairs. The newer your vehicle, the more efficient it will be at eliminating forces that would cause you harm.
This means that even in a low-velocity impact, the vehicle will crumple. If the crumpling is bad enough, entire panels on the car may need replacing.
If you’re involved in a wreck with someone uninsured, you won’t get any money from them at all. Without uninsured coverage, all costs will be out of pocket for you unless you go to court.
Legislated Liability Limits Vary by State
For those living in Florida, the legally mandated amount of liability coverage you have to maintain is $10,000 for personal injury and up to $20,000 per accident. This is not true of all states. Some are even lower still. This means that the average medical bill for a car accident will nearly exceed the liability they have covered.
Another area in which you can be substantially at risk is with out-of-state drivers. Depending on what state they are from, there is the potential that their insurance will cover even less. This means that in Florida, you won’t receive enough money to cover the average expenses of an accident.
Getting an underinsured motorist provision in your insurance protects you against the risk of being left without sufficient money to pay bills. It is difficult enough when getting through a car accident, let alone having to come up with thousands of dollars and hoping for some kind of reimbursement.
Confusion Based on Terms
The term underinsured is most often heard when referring to health insurance. In the context of health insurance, it means someone who is insufficiently insured against the medical bills they may incur. While the concept is exactly the same when it comes to motorist insurance, the application is a bit different.
With health insurance, the underinsured must get new policies in order to protect themselves. In auto insurance, you must get a provision that protects you from them. In this way, the responsibility to be protected falls on you.
Not all auto insurances you can get cover underinsured drivers. If you go for the lowest price insurance, you aren’t always able to get useful provisions that protect you better. This can end up costing you an incredible amount of money.
When Looking for Car Insurance
If you are interested in having uninsured or underinsured motorist coverage, you’ll want to compare insurance providers. This will help you determine who offers the protection you are interested in and who offers it for the best price.
Comparing what is offered by the various insurance companies will help you determine what is right for you. Those who live in Florida will have different needs than those who live in other states.
A state with a higher cost of living is going to require more liability coverage. The expenses incurred in a state like Florida may be higher than what you would expect in a state like Kansas.
This is one reason why higher priced car insurance can be more appropriate. The only reason you would want to pay more is because it offers more protection. These protections shouldn’t just be in the form of overall liability protection, but they should cover underinsured and uninsured motorists as well.
Tourists and Out of State Drivers
In a state like Florida, there’s an enormous amount of out of state traffic. Tourists come from all over the world, and they drive from everywhere in the United States. Among these drivers, you can assume that 1 out of every ten you see does not have auto insurance.
That means that there are thousands of uninsured drivers on the road in Florida every day. The numbers on how many are underinsured are not as easily available. You won’t know who may be underinsured until you get in a wreck with them.
This may seem a bit ominous, but remember the financial impacts are significant. Having underinsured motorist coverage can take a bit of the fear out of the unknown. You won’t have to worry every time you get into a wreck that their insurance won’t cover you.
Insurance Protects You
Having underinsured motorist coverage helps to protect you against a threat that you won’t see coming. This threat is a motorist causing damage to your property or harm to you or your family.
If you don’t have this type of insurance, you have only one recourse, and that is through the courts. An underinsured motorist can still be sued by a personal injury lawyer. Their insurance may be forced to pay a greater portion than they would have otherwise.
In order to avoid a trial and a large percentage of what should be covering your medical bills going to a lawyer, get uninsured and underinsured motorist coverage. This will remove the need for you to worry about entering the legal system while still recovering from an injury.
Before you purchase any insurance, make sure to compare providers. Our website, Policy Pilot, does just this. It allows you to compare the coverage and prices of the insurance you are considering.
We don’t just deal with auto insurance, but with home, health, auto, and life insurance. You won’t overpay with any insurance as long as you compare them before purchasing.
Compare providers today for some of the best deals around.