Working With Your Insurance Agent

« Back to Home

Understanding Uninsured And Underinsured Motorist Coverage

Posted on

If you are an auto accident victim and another person is liable for the accident, then the liable party should compensate you for your damages. The liable party's auto insurance company will often compensate you for your damages up to their client's coverage limit. This arrangement has two limitations. 

First, you might not get the compensation you deserve if the liable party doesn't have insurance coverage. Secondly, you might not get full compensation if your damages exceed the liable party's coverage limit. Uninsured and underinsured motorist (UM and UIM) coverage can help with both cases.

Meaning of UM/UIM

UM coverage applies if you are the victim of an auto accident by an uninsured motorist. Consider a driver who takes a quick ride to the store with elapsed coverage. If the driver crashes into your car, you file a first-party insurance claim, and your carrier will use your UM coverage to compensate you for the damages.

On the other hand, UIM coverage applies if your auto accident damages exceed the liable party's coverage. If your auto accident damages total $50,000 and the liable motorist has a coverage limit of $40,000. If you have UIM coverage, file with their insurance first and get the remaining $10,000 from your insurance company.

UM/UIM Candidacy

Any motorist can benefit from UM/UIM coverage. However, you should not drive without coverage if you fall under these circumstances.

Your State Requires It

Some states require UM and UIM coverage from all drivers. A few states require UM coverage. Always carry the mandatory insurance coverage your state requires if you plan to drive.

You Have Low Emergency Cash Reserves

You can always cover your auto accident damages with your savings – if you have the money. However, you should strongly consider UM/UIM coverage if you lack adequate resources to cover your damages in case of a crash.

You Want Peace of Mind

Many people buy auto insurance because they don't want to worry about money in case they get into an accident. With UM/UIM, you have peace of mind since you know you are covered in all accidents, irrespective of the liable party's insurance status.

You Frequently Drive in Different States

Minimum insurance limits vary by state. Some states have low limits that might not cover your damages in case of an accident. Even if your state has reasonable limits, consider UM/UIM coverage if you frequently drive out of state. That way, you have adequate protection even if you are in a crash with a driver with minimal insurance coverage.

Reach out to an auto insurance agency for more information.