Underinsured / Uninsured Motorist Coverage Insurance
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UPDATED: Sep 30, 2014
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Just when you thought you had all of your bases covered for your insurance coverage, you hear about some other type of policy option. Some of it could be overkill depending on your situation. Yet some of it could actually still be really important for you to have.
So how are you supposed to know the difference? The main way to avoid not having everything included in your policy that you need is to understand your options. You can also ask questions of your provider or any potential carriers. However having some of this knowledge yourself can help make you a smart consumer and well protected driver.
What Is Underinsured / Uninsured Motorist Coverage Insurance?
As the names imply the meaning, you can get an idea of what underinsured and uninsured motorist coverage insurance is all about.
- Underinsured — The at fault driver of an accident you are in has insurance, but not enough to cover all of the expenses from personal property damage and medical expenses. It could even be that the driver relocated to a state with higher minimum but never updated his insurance policy to the new state. Either way, any costs above that maximum are yours to pay unless you can sue them and collect the difference. Or unless you have underinsured motorist coverage.
- Uninsured — Even worse than the first scenario is the uninsured motorist. While illegal in most states because most states now require a minimum amount of insurance coverage, some drivers still take the chance. Even though they are at fault and did the wrong thing by not having any insurance, you are still going to be stuck with the bill for all of your expenses related to the accident. That is unless you have an uninsured motorist policy.
It’s not fun and doesn’t seem fair to have to pick up the slack for other drivers who may be negligent in taking care of their car insurance coverage responsibilities. However the quicker you move past worrying about fair and just make sure you are covered, the better.
How Does It Work?
Keep in mind some drivers end up being in the wrong just by crossing state lines, but it is not always their fault. Or, we should say, their intent was not malicious.
- A driver lives in a state that does not require even liability insurance coverage to operate a vehicle. While it is still a bad idea and poor judgment to choose to get behind the wheel with absolutely no insurance coverage, in their state this may not be criminal. However if this driver crosses into a neighboring state that requires insurance and has an accident, it leaves another driver stuck with the financial damages.
- A driver in one state has insurance and even has the required state minimum where he lives. However while visiting another state this driver causes an accident but the other driver will have to cover the difference in damages from what his or her policy maxed out at and what the actual damages cost.
Basically you will want to add underinsured and uninsured motorist coverage insurance that includes bodily injury and property damage. This is your best way of getting protection from motorists without protection.
Other Things to Consider
Don’t I already have this? It seems with all the other types of coverage I have one of them should be in place to take care of this type of thing?
In some cases you may be right. For example, bodily injury may take care of your own medical expenses. And your collision coverage may take care of part or all of your property damage, in other words your vehicle.
However you can never assume this is the case. When you get a policy in place, you should always have a clear understanding of what exactly it covers. Even after your policy provider’s rep goes over what you have, ask specific questions. Give him or her some different scenarios and ask if you would be covered or what would happen.
Do not wait until an accident that was not your fault totals your car and results in costly medical bills just to find out you didn’t have that covered. You have no way of knowing what type of coverage each driver you come in contact with during the day actually has. So instead of leaving it to chance, make sure you at least know what type of coverage you have and make sure it is enough.
Costs & Determining Factors
Like any automobile insurance policy, one of the determining factors for your insurance is how much you are including. If you get “the works” the deductible will be higher than someone who gets just the basic minimum requirements.
There are two types of underinsured and uninsured motorist coverage:
- UMBI — Uninsured / Underinsured Motorist Bodily Injury covers medical costs for you and your passengers. It should include coverage from hit and run drivers, but be sure to ask your policy provider for full details. It may also include costs such as lost wages and injury-related expenses including prescription medications and even follow up physical therapy or similar accident caused injury related needs.
- UMPD –– Uninsured / Underinsured Motorist Property Damage is to help cover expenses related to damage to your car and possibly the contents. Usually it does not cover hit and run accidents. So check on this and if your vehicle contents (such as GPS or the laptop you had in the front seat for work) are covered or not.
Other Things to Think About
Here is a little bit of not-so-great news. There is still at least one state that does not require any type of car insurance coverage to get behind the wheel of an automobile. So while you can use underinsured and uninsured motorist coverage insurance to protect yourself, you should be aware of one thing.
In a state that does not require auto insurance coverage, you are going to have a significantly higher rate of uninsured drivers. This means that drivers in that state will not only have to pay for uninsured coverage, but it will be higher in that state because the risk is greater.
Based on national average as many as one in seven drivers are driving around without any insurance protection. That’s a national average, not just for a state that may not require drivers carry coverage. In fact, it is actually because of this high rate of uninsured drivers on the road that some states actually require drivers to include uninsured motorist coverage.
Currently the states that do require some type of underinsured and uninsured motorist coverage insurance include:
- South Dakota
- West Virginia
- New Hampshire
- North Carolina
- Rhode Island
- South Carolina
- New York
- New Jersey
With that being said, you may still be wondering if you should get underinsured and uninsured motorist coverage insurance or may need to because it is required by your state or the finance company you have your car through. Here is a basic run down of how you should work through the process of getting this type of coverage.
- Find out if you need it. As previously mentioned, you may know you need or are required to have underinsured and uninsured motorist coverage insurance. If you are not sure, you should find out if you have it already in your policy. If you then realize you do not have it even under another policy, such as collision coverage, and want it or are required to have it, then you will want to begin to shop around.
- Be aware of your driving and insurance coverage history. How clean is your record? Did you have any lapses in car insurance coverage greater than 30 days? These are things you will need to know before shopping for policies. If not, you won’t have data that may be needed or may be quite surprised to find out your rates are going to be much higher than anticipated. However you should be aware of your driving record so you can make sure past incidents have been taken care of or come off your record when they are supposed to. An accident from two years ago will still impact your premium rates. However once it hits the three year mark, it should no longer be causing your rates to be higher so make sure your company drops your rates once your driving blemishes disappear.
- Write down questions. Now that you have an idea of what underinsured and uninsured motorist coverage insurance is, you should also know what questions to ask. For instance you should find out if a policy provider offers UMPD (Uninsured / Underinsured Motorist Property Damage) that covers a hit and run accident. When you sit down to make a decision about which company to choose, details such as this may be the deciding factor.
- Know about potential discounts. Nothing is worse than missing out on free money. Getting a discount you deserve is free money. There are actually all kinds of discounts available, and you should take advantage of as many as possible. From military to good driver to even getting a drop in price once you get married (usually for younger drivers), there are lots of ways to drop the price. So make sure you also make a note to let your policy provider know if something changes, such as if you sign up for the military or get married.
- Always compare. You may not even take the cheapest rates because you may like the coverage of another policy better. But you should be aware of your options. Even if you have been with your current provider for a while, it is a good idea to at least compare how they stand up to the competition.
Getting underinsured and uninsured motorist coverage insurance may not seem terribly fair as other drivers should take care of their responsibilities. When it comes down to it, though, it is nice to know you have yourself covered no matter what.