Underinsured motorist coverage helps protect you when the at-fault driver’s insurance isn’t enough to pay for all your accident-related losses.
Getting into a car accident is stressful enough. It becomes even more frustrating when you find out the other driver doesn’t have enough insurance to cover the damage or your medical bills. This is exactly where underinsured motorist coverage can make a big difference.
Understanding Underinsured Motorist Coverage in Plain English
Underinsured motorist coverage is an optional part of an auto insurance policy. It steps in when another driver causes an accident, but their liability insurance limits are too low to fully pay for your losses.
In simple terms, it fills the gap between what the at-fault driver’s insurance pays and what you actually need to be made whole.
For example, if your medical bills and car repairs add up to $80,000 but the other driver’s insurance only covers $30,000, underinsured motorist coverage may help pay the remaining $50,000, depending on your policy limits.
How It’s Different from Uninsured Motorist Coverage
People often confuse underinsured motorist coverage with uninsured motorist coverage. They sound similar, but they solve different problems.
Uninsured motorist coverage applies when the at-fault driver has no insurance at all. Underinsured motorist coverage applies when the driver does have insurance—just not enough.
Both types are designed to protect you, not the other driver.
What Underinsured Motorist Coverage Typically Pays For
Underinsured motorist coverage usually helps with two main types of losses:
Bodily Injury
This includes medical bills, hospital stays, surgery, physical therapy, lost wages, and even pain and suffering, depending on state laws and your policy terms.
Property Damage
In some states, underinsured motorist coverage also helps pay for damage to your vehicle or other property. In other states, property damage may be handled separately or through collision coverage.
Not every policy is the same, so it’s always smart to check what your coverage includes.
A Real-Life Example
Imagine you’re driving to work and another driver runs a red light and hits your car. You suffer injuries that require surgery and months of recovery. The total cost of your medical care and lost income reaches $100,000.
The at-fault driver carries the state minimum liability insurance of $25,000. That amount barely covers a fraction of your losses.
If you have underinsured motorist coverage with a $100,000 limit, your insurer may pay the difference between the $25,000 already paid and your total losses—up to your policy limit. Without this coverage, you could be stuck paying the rest yourself.
Why Underinsured Motorist Coverage Matters
Many drivers carry only the minimum insurance required by law. Unfortunately, those minimum limits often fall short in serious accidents.
Underinsured motorist coverage acts as a financial safety net. It protects you from other people’s insurance decisions, which are completely out of your control.
It can also save you from having to sue the at-fault driver personally, which can be time-consuming, expensive, and uncertain.
Is Underinsured Motorist Coverage Required?
Whether underinsured motorist coverage is required depends on your state. Some states mandate it, others make it optional, and a few allow drivers to reject it in writing.
Even when it’s optional, many insurance experts recommend carrying it because it’s usually affordable compared to the protection it offers.
Choosing the Right Coverage Amount
A good rule of thumb is to match your underinsured motorist coverage limits to your own liability limits. This helps ensure you’re protected at a level similar to what you provide for others.
Your insurance agent can help you choose limits that fit your budget and risk level.
Peace of Mind on the Road
Underinsured motorist coverage isn’t about expecting an accident—it’s about being prepared for the unexpected. When another driver’s insurance falls short, this coverage helps protect your finances, your recovery, and your peace of mind.
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