Car insurance is a crucial safeguard for drivers and is often legally required by states. Auto liability insurance, a standard component of a car insurance policy, helps cover damages you cause to others in an accident, saving you from significant out-of-pocket expenses. For example, if you rear-end another car, your liability coverage can help pay for the other party’s vehicle repairs and medical costs, up to your policy’s limits. Without liability coverage, you would be personally responsible for those expenses.
Despite its importance and potential legal requirements, some drivers still lack auto liability insurance or carry liability limits that are too low to cover the damages they cause. These uninsured or underinsured drivers can put you at financial risk if they cause an accident. This is why uninsured/underinsured motorist (UM/UIM) insurance is essential.
What Is Uninsured/Underinsured Motorist Coverage?
Uninsured/underinsured motorist (UM/UIM) coverage helps pay for car repairs and medical costs for you and your passengers if the at-fault driver doesn’t have enough insurance or any auto liability insurance. Depending on your 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 can 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 driver who is at fault but lacks sufficient insurance to cover the damage, your UIM coverage can step in. For instance, if the total medical and property damage amounts to $200,000, but the other driver’s insurance only covers up to $100,000, you can claim the balance against your insurance provider up to your policy’s limits.
In the case of a hit-and-run accident, your UM coverage may also apply. However, depending on your location and insurer, there may be additional requirements regarding property damage. Some insurers may require hit-and-run claims for vehicle damage to go through your collision coverage rather than UM/UIM.
It’s important to note that UM/UIM coverage won’t provide a payout until the other driver’s fault is established. This stipulation can affect when you receive compensation for damages.
How Much Coverage Do I Need?
When reviewing UM/UIM insurance options, it’s crucial to understand the liability limit amount. This is the maximum amount the insurance company may pay for an applicable UM/UIM claim. Generally, your UM/UIM limit should match your auto liability limit, which is the maximum amount your insurance would pay if you caused damage to others.
Keep in mind that the UM/UIM limit cannot exceed your auto liability limit. If you want higher limits on your UM/UIM coverage, you must first increase your auto liability limits. Alternatively, you might consider “excess UM/UIM” coverage, which kicks in after your initial UM/UIM limit is reached. This can be part of a personal umbrella policy, offering greater liability protection.
If your insurer offers personal injury protection (PIP) or medical payments (MedPay) coverage, you might 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 provide sufficient protection involving an uninsured or underinsured driver.
Speak with your Knauf Maxwell Insurance Services agent to discuss your circumstances. They can help recommend coverages and walk you through key policy details.
Final Considerations
Driving comes with inherent risks, and accidents happen every day. As inflation and other factors cause prices to rise, more people may skimp on their insurance. Without UM/UIM insurance, you could be left responsible for damages you didn’t cause if an uninsured driver hits you.
Don’t let irresponsible drivers jeopardize your financial security. Contact Knauf Maxwell Insurance Services today to learn more about UM/UIM coverage and other insurance solutions that can help protect you after an accident.
