What is underinsured motorist coverage?
Underinsured motorist coverage provides additional limits to your policy in the event that you are injured in an accident and the at-fault party cannot afford to pay all of your bills. In some states, underinsured motorist insurance is included in your policy, while in others it can be added to your policy by request. Learn how to add underinsured motorist coverage in our guide below.
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UPDATED: Jan 25, 2021
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Simply put, “underinsured motorist coverage” is offered to provide additional limits of insurance to you in the event you are injured in an accident where the at-fault driver does not have high enough insurance limits to pay for all of your bills.
It can be included in a liability-only car insurance policy, so it’s an option even if you don’t pay for physical damage coverage to protect your own vehicle.
In some states, underinsured motorist coverage is included in your policy, while in others it can be added to your policy by request.
Typically, you have to request higher insurance limits than the state minimum car insurance in order to have underinsured motorist coverage on you policy.
Underinsured motorist coverage is usually offered together with uninsured motorist coverage on your policy.
It is important to know the difference between the two. If you get into an accident, you can collect benefits from your insurance company for one or the other, but not both.
Difference Between Uninsured and Underinsured Motorist Coverage
Uninsured Motorist (UM) coverage protects you when you get into an accident caused by another driver who has NO insurance.
Underinsured Motorist (UIM) coverage protects you when you get into an accident caused by another driver who has insurance, just not enough to pay for all of the injuries sustained.
Example: Philip has an insurance policy limit of $25,000 of liability for injury to one person for an accident he causes.
Philip swerves over the centerline of a rural road and runs into Tommy, who has underinsured motorist coverage on his insurance policy with a limit of $50,000 per accident.
As a result of the accident, Tommy incurred $39,000 in hospital bills.
Philip’s insurance company will only pay up to his $25,000 limit, which leaves $14,000 in hospital bills unaccounted for.
Fortunately, the underinsured motorist coverage on Tommy’s liability insurance policy will cover the additional $14,000 in costs.
As with all insurance coverage, it is in your best interest to purchase underinsured motorist coverage if your insurance budget will allow it.
Please note that different insurance companies offer unique coverage and have certain exclusions.
It’s a good idea to discuss this type of coverage with your insurance company or agent to ensure you fully understand your level of protection.