Why It Can Pay to Have Uninsured Motorist Insurance   

Car insurance is a vital safeguard for drivers that is often legally required by states. Specifically, auto liability insurance (a standard component of a car insurance policy) can help pay for damages you cause to others in an accident, saving you from costly out-of-pocket expenses. For example, if you rear-end another car, your liability coverage may help pay for damages to the other party, including their vehicle repairs and medical costs, up to your policy’s limits. If you didn’t have liability coverage in this scenario, you would be personally responsible for paying those expenses.

Yet, despite its importance and potential legal requirements, some drivers still don’t have auto liability insurance. Or their liability limits are too low to pay for the damages they cause. These individuals can put you in financial jeopardy if they cause an accident. This is why uninsured/underinsured motorist insurance is essential.

What Is Uninsured/Underinsured Motorist Coverage?

Uninsured/underinsured (UM/UIM) coverage may help pay for car repairs and medical costs for you and your passenger if the driver at fault doesn’t have enough insurance or no auto liability insurance at all. Depending on location and insurer, this type of coverage may be offered jointly or separately. If you or your passengers are injured due to the negligence of an uninsured or underinsured driver, you may seek compensation for injuries and damages through the UM and UIM portions of your policy.

How Does Uninsured/Underinsured Motorist Coverage Work?

If you are in an accident with another person found to be at fault, but they do not have enough insurance to cover the damage, your UIM coverage can kick in. For example, if the medical and property damage totals $200,000, but the other driver’s insurance only covers up to $100,00, you can claim the balance against your insurance provider up to the policy’s limits.

In the case of a hit-and-run accident, you may also be able to leverage your UM coverage; however, depending on location and insurer, there may be additional requirements regarding property damage. For instance, some insurers may require hit-and-run claims for vehicle damage to go through your collision coverage rather than UM/UIM.

Critically, UM/UIM coverage won’t provide a payout until the other driver’s fault is established. This stipulation can affect when money is received for damages.

How Much Coverage Do I Need?

There are a few considerations to keep in mind when reviewing UM/UIM insurance options. Perhaps the most important aspect to understand is the liability limit amount. When choosing your coverage, you can set the limit of your UM/UIM coverage; this establishes the maximum amount the insurance company may pay for an applicable UM/UIM claim. Generally, this limit should be the same as your auto liability limit (i.e., the maximum amount your insurance would pay if you caused damage to others).

It’s important to note that the UM/UIM limit cannot exceed your auto liability limit. Thus, if you want higher limits on your UM/UIM coverage, you must first increase your auto liability limits. Alternatively, you may consider “excess UM/UIM” coverage (which would kick in after your initial UM/UIM limit is reached) as part of a personal umbrella policy, which could offer greater liability protection.

If your insurer offers personal injury protection (PIP) or medical payments (MedPay) coverage, you may be able to leverage that insurance after an accident, regardless of fault. However, these coverages—which may not be available in all locations—have their own rules and may not offer sufficient protection involving an uninsured or underinsured driver.

Speak with your Sanford & Tatum, An Alera Group Company agent to discuss your circumstances. They can help recommend coverages and walk you through key policy details.

Final Considerations

Driving comes with many inherent risks, and accidents happen every day. As inflation and other factors cause prices to rise, more people may be skimping on their insurance. Without UM/UIM insurance, you could be left on the hook for damages you didn’t cause if an uninsured driver hits you.

Don’t let irresponsible drivers risk your financial security. Contact Sanford & Tatum, An Alera Group Company today to learn more about UM/UIM coverage and other insurance solutions that can help protect you after an accident. 

© 2024 Zywave, Inc. All rights reserved. This Know Your Insurance document is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.