If you’re like most people, you probably don’t know much about Underinsured Motorists coverage. Most people only think about it when they need it, and unfortunately, that’s usually after they’ve been in an accident. This insurance can be a life-saving investment, though, so it’s important to understand what it is and why you might need it. Stay tuned for more information on it with PowerPACplus!!
What is it?
Your auto insurance policy can be supplemented with underinsured motorist coverage. It protects you if you’re involved in an accident with someone who doesn’t have enough insurance. In the event of an accident, the at-fault party’s insurance is supposed to reimburse the other wounded party.
If the at-fault party’s policy has a limit that is less than the cost of the damages, the injured party’s underinsured motorist coverage would pay the difference. Underinsured motorist coverage has two parts:
- Underinsured driver property damage:
Covers damages to your car or other property that are not covered by your insurance.
- Underinsured motorist bodily injury:
Coverage pays for covered medical expenses, lost earnings, and other damages you or your passengers may suffer.
Some people prefer to take only the bare minimum of liability insurance in order to save money. They are frequently underinsured as a result of this decision, and will be unable to pay for vehicle damage or medical expenditures if they cause an accident. That’s why underinsured motorist coverage is crucial: it protects you from drivers who aren’t adequately insured.
How does it work?
Underinsured motorists coverage have liability auto insurance, but not enough to cover all of the damage they cause. Liability insurance is a component of an auto policy that covers vehicle repairs and injuries to others caused by a collision in which you were at fault. Other injured drivers and passengers may end up footing the price if an at-fault driver doesn’t have enough liability coverage.
Underinsured motorist coverage protects you from this by covering the gap between the at-fault driver’s policy limit and the total cost of the damage they cause.
This coverage is especially useful if you’re hit by someone who only has the bare minimum of auto insurance. Minimum liability limitations for bodily injury in some states are as low as $15,000; medical expenditures following a serious accident could easily exceed that amount.
What are the benefits of having this insurance?
Underinsured motorist coverage is typically a low-cost add-on to your auto insurance policy, but it might be useful if you’re in an accident and the driver who was judged to be at fault does not have enough insurance to pay the cost of the crash’s damages. This happens a lot more often than one might think: According to the Insurance Research Council, one out of every eight drivers on the road in the United States is uninsured.
Even if someone has insurance, they may just have acquired the bare minimum necessary by their state, which varies by state. The only states in the United States that do not need a minimum amount of auto insurance coverage are New Hampshire and Virginia.
However, all states have financial responsibility rules, so even if you don’t have insurance, you must show that you can pay for damages if you cause an accident.
Different types of underinsured motorist coverage are available from most insurance providers. Some coverage will include bodily injury and others will be for property damage, while still others will cover both costs
In general, underinsured motorist coverage is less expensive than other types of car insurance. You’ll pay more if you increase your coverage limits, as you will with most types of insurance. Uninsured and underinsured motorist limits are frequently set at the same level as liability limits by drivers. Because all three forms of coverage are intended to protect your financial assets from the costs of an automobile accident, the higher your net worth, the higher the limits you should consider.
How to make an Underinsured motorists Coverage claim?
If you’re in a car accident and the at-fault driver doesn’t have any or enough liability insurance, call your insurance company and file a claim under your uninsured motorist coverage (provided you have coverage)
- You’re stopped at a red light when a vehicle without insurance rear-ends you.
File a UM claim with your auto insurance carrier since the at-fault driver does not have insurance. For your medical expenditures, you’d submit an insistence under your uninsured motorist bodily injury (UMBI) policy, and for damage to your automobile, you’d submit a claim under your uninsured motorist property damage (UMPD) coverage, if you have it.
- You’re a pedestrian crossing the street when you’re hit by a car who doesn’t have enough liability insurance to cover all of your medical bills.
To begin, submit an insistence with the at-fault motorist’s auto insurance company or sue the at-fault driver to recover money from their liability insurance. Then, to cover further expenditures, you’d make a claim with your own car insurance provider under your underinsured motorist bodily injury (UIMBI) coverage.
- Your car is parked in a parking garage that is open to the public. You discover it has been hit and damaged, but the other motorist has left no contact information.
You would file a claim under your UMPD coverage in the event of a hit-and-run (if your state allows it). File a claim through your collision coverage if you don’t have UMPD or your state doesn’t let you use it for hit-and-runs.
If you are in an accident and the other driver is at fault, their insurance company will pay for your damages. But what happens if the other driver doesn’t have enough insurance to cover your costs? Underinsured motorist coverage protects you in that situation. This type of insurance kicks in when the damages exceed the other driver’s policy limits. It can also help protect you if you are hit by a driver who doesn’t have any insurance at all. Considering underinsured motorist coverage is important, especially given how common accidents can be. Review your policy today to make sure you are fully protected in case of an accident.