Underinsured motorist coverage or UIM, is a type of auto insurance coverage that provides protection in the event of an accident where the at-fault driver has insufficient liability coverage to fully compensate the policyholder or the policyholder’s passengers. In other words, if the at-fault driver has insufficient liability insurance to cover the cost of the damages, the underinsured motorist coverage can step in and provide additional coverage.
What Does Underinsured Motorist Coverage Cover?
Underinsured motorist coverage is typically used to cover medical expenses, lost wages, and/or property damage that occurs when the at-fault driver has insufficient liability insurance. The coverage will typically cover any costs that exceed the at-fault driver’s liability coverage limit. For example, if the at-fault driver’s liability coverage limit is $15,000 and the total cost of the accident is $25,000, the underinsured motorist coverage can provide the additional $10,000 needed to cover the costs.
When Is Underinsured Motorist Coverage Used?
Underinsured motorist coverage is typically used when the at-fault driver has insufficient liability coverage to cover the full amount of the damages. This can happen when the at-fault driver is uninsured or underinsured. In some states, it is even possible for the policyholder to use their underinsured motorist coverage if the at-fault driver is insured but the policy limit is insufficient to cover the total cost of the accident.
Who Is Covered By Underinsured Motorist Coverage?
Underinsured motorist coverage typically covers the policyholder and any passengers in the vehicle at the time of the accident. In some cases, it can also cover other people who are injured as a result of the accident, such as pedestrians or bicyclists.
What Is The Difference Between Underinsured Motorist Coverage and Uninsured Motorist Coverage?
Underinsured motorist coverage and uninsured motorist coverage are both types of auto insurance coverage, but they provide different types of protection. Uninsured motorist coverage provides protection in the event of an accident where the at-fault driver is completely uninsured. On the other hand, underinsured motorist coverage provides protection in the event of an accident where the at-fault driver has insufficient liability coverage to fully compensate the policyholder or the policyholder’s passengers.
How Much Does Underinsured Motorist Coverage Cost?
The cost of underinsured motorist coverage varies depending on the state and the insurance company. Generally speaking, the cost of the coverage is based on the amount of coverage purchased. The more coverage purchased, the higher the cost. The cost of the coverage can also vary depending on the deductible chosen.
Is Underinsured Motorist Coverage Required?
Underinsured motorist coverage is not required by law in most states. However, some states do require that drivers carry a certain amount of underinsured motorist coverage. It is important to check with your state’s Department of Motor Vehicles to determine if your state requires underinsured motorist coverage and, if so, how much coverage is required.
What Happens If I Don’t Have Underinsured Motorist Coverage?
If you are involved in an accident and the at-fault driver has insufficient liability coverage to cover the full amount of the damages, you may be unable to recover the full amount of the damages unless you have underinsured motorist coverage. If you do not have underinsured motorist coverage, you may have to pay out of pocket for any costs that exceed the at-fault driver’s liability coverage limit.
Should I Purchase Underinsured Motorist Coverage?
Whether or not you should purchase underinsured motorist coverage is a personal decision that should be based on a number of factors. It is important to consider the cost of the coverage, the risk of being involved in an accident with an at-fault driver who has insufficient liability coverage, and the potential cost of the damages that exceed the at-fault driver’s liability coverage limit. Ultimately, it is up to you to decide if underinsured motorist coverage is right for you.
