What is the Difference Between Uninsured and Underinsured Coverage?

When you are comparing car insurance you will probably come across the terms ‘uninsured motorist coverage’ and ‘underinsured motorist coverage.’ This type of collision car insurance pays for damages to yourself if the other driver is held accountable for the accident but either driving without any insurance or does not have adequate insurance to pay for the injuries you have sustained. Either way, it offers additional protection for the policy holder.

Uninsured Vs Underinsured Motorist Coverage

There are not a lot of differences between uninsured and underinsured motorist coverage. Both uninsured and underinsured motorist coverage will pay for the damages incurred in an accident, including any medical related costs and vehicle repairs, in the event that the other driver is liable for the accident but without proper coverage for the vehicle. If the driver has some coverage, then underinsured motorist coverage will come into play; if the driver is driving without any insurance, then uninsured motorist coverage will be needed.

Uninsured motorist coverage will pay for any expenses incurred if the other driver is found at fault for the accident but does not have insurance. This includes drivers of a stolen vehicle, hit and run accidents and drivers that are driving without insurance. If a driver has insurance but it is not enough to cover your costs incurred, then underinsured motorist coverage will take effect. It will pay the balance of what is still owed up to the limit decided on your policy.

Buying Uninsured/Underinsured Motorist Coverage

Uninsured and underinsured motorist coverage are generally bought together. While they are required by law in many states, many other states have this coverage as an optional extra. You will most likely need to purchase a certain amount per person as well as per accident which is often written as so: “$_/$_”. For example, $25,000 per person up to $50,00 per accident of uninsured and underinsured motorist coverage is a fairly standard amount to fulfill the basic coverage requirements. Regardless of whether you are required or not to purchase uninsured and underinsured motorist coverage, it is an important type of coverage to include on your policy.

Uninsured and underinsured motorist coverage will often be split up into bodily injury uninsured/underinsured coverage and property damage uninsured/underinsured coverage. The former will pay for medical and injury related expenses while the latter pays for damage to your vehicle and other property. In some states both are required while in other states only bodily injury uninsured coverage is required.

While it is against the law to drive without insurance, many people do so on a daily basis. In fact, it is estimated that as much as 1 in 6 drivers will drive without insurance. In 2007 this number was at 13.8 percent[1]. What this means is that there is a high chance that if you are in an accident, the other drive will not be adequately covered and able to handle your expenses.

Overseas drivers or out of state drivers may be driving without adequate coverage for the required state. Family members may be driving a vehicle that they are not on the policy for and some drivers are simply irresponsible and choose to drive without mandatory car coverage. Whatever the case, uninsured and underinsured motorist coverage protects safe drivers that are responsible enough to purchase insurance for their cars. Rather than be penalized for someone else’s lack of responsibility on the road, you are still protected and your insurance will pay for any damage. This is a comforting thing to have on and off the roads.

[1] http://www.ircweb.org/news/IRC_UM_012109.pdf 04/04/2011

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