Uninsured / Underinsured Motorist Coverage

One of the unfortunate side effects of the economic downturn that impacts every driver on the road: The number of uninsured and underinsured motorists is expected to rise.

According to a study from Insurance Research Council, about one in six drivers across the United States may be driving uninsured and the number increases when you add underinsured drivers.

This means responsible drivers who purchase insurance may end up paying for injuries caused by uninsured and underinsured drivers.

How does Uninsured / Underinsured Motorist Coverage work?

Uninsured Motorist Coverage:
Many people understand Uninsured Motorist Coverage. If you are in an accident with another vehicle and the other driver is determined to be at fault for the accident, and they do not have insurance, your bodily injuries and/or your passengers’ injuries would be covered by the Uninsured Motorist Liability Coverage on your Auto Policy.

If the Uninsured Motorist Coverage Limit of Insurance on your auto policy is $30,000, but you have injuries of $75,000, your policy will only pay up to $30,000. 

The Auto liability limits and Property Damage Liability limits on your auto policy will only pay if you are at fault in the accident, and they will only pay for the other driver’s bodily injury and property damages as well as any of theirs’ or your passengers damages. They will not cover your injuries nor pay for repairs to your vehicle.

 Underinsured Motorist Coverage:
Many people are unaware that Underinsured Motorist coverage is as important if not more important than Uninsured Motorist Coverage. There are more people that do not carry enough limits of Auto Liability insurance than are uninsured. 

Underinsured Motorist Coverage works in a similar way as Uninsured Motorist except that it ONLY applies as excess insurance over the other driver’s insurance and is limited to the difference between the limits you carry and what the other driver carries.

For Example:  If you are in an accident with another vehicle and the other driver is determined to be at fault for the accident, and they do have insurance, any bodily injuries to you or your passengers may be paid by their Auto Liability limit. However, if they do not carry a high enough limit to cover your damages then your Underinsured Motorist Coverage may pay the difference, only if your Liability limits are higher than the other drivers.

If the other driver’s Auto Liability limits of Insurance are $50,000 and the Underinsured Motorist Coverage Limit of Insurance on your auto policy is $100,000, and you have bodily injuries of $75,000, the other driver’s insurance would pay $50,000 and your auto policy would pay up to $25,000 under the Underinsured Motorist Coverage.

Now, in the above scenario, if your Underinsured limit is only $50,000 and the other driver’s Auto liability limit is $50,000, your policy would not pay any amounts under the Underinsured Motorist coverage.  It will only pay the difference between your limits and the other driver’s liability limits.

We always recommend our clients to carry high limits of Underinsured Motorist Coverage as we have had several clients who have had to use those higher limits because they were in an accident with someone who was carrying low limits of liability.  

If you haven’t reviewed your liability coverage recently, now is a good time to revisit your auto coverage to ensure you avoid extra costs after an accident. We’re happy to help – and we can often increase your coverages without a significant increase in premium.

To find out if you should increase your Uninsured / Underinsured Motorist Coverage, call us at 925-693-9912.

If you would like to subscribe to our blog posts so you receive them directly in your email, please
click here to subscribe.

Client Service Team
Insurance Management Corporation