What Is Uninsured Motorist Coverage?
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UPDATED: Mar 13, 2020
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As you may know, driving a car is dangerous business.
Any time you take a giant piece of steel and set it in motion at speeds of 65 mph or more, things can go badly wrong.
Add to that the fact that some people don’t take driving very seriously and you have a recipe for disaster.
Good thing everyone who drives a car has insurance! Yeah, we laughed while writing that so we expected you to laugh while reading it.
The fact is; there are tens-of-thousands of people driving on U.S roadways who do not bother to purchase insurance.
In fact, a recently released report revealed that approximately 1 in 6 drivers do not have car insurance. Yikes!
So, how can you protect yourself against these irresponsible drivers?
Enter Uninsured Motorist Coverage
Well, “uninsured motorist coverage” can be added to your car insurance policy (for a price) to protect you against financial losses you may suffer as a result of an accident caused by a driver who does not have their own insurance.
Covered expenses for you and your passengers include medical bills, compensation for pain and suffering, lost wages, and damage to your vehicle.
Uninsured motorist coverage may also protect you against a hit-and-run driver.
For example, if someone hit your car and simply drove off without stopping at the scene, uninsured motorist coverage could come into play
Just keep in mind that the insurance company will typically need to track down the driver to determine if they are truly at fault and uninsured.
Note: Underinsured motorist coverage works almost the same way. The only difference being, the person who caused the accident has an insurance policy, but their liability limits are not high enough to pay for all of the damages you suffer.
So once the at-fault party’s insurer pays out the maximum limit on their policy, your own insurer covers the rest of the costs – up to your policy limit.
Uninsured Motorist Coverage Limits
You have the option to choose different levels of uninsured motorist coverage on your policy.
This is exactly like choosing the liability limits you want your insurer to cover when you cause an accident.
You will be able to select an amount of coverage to protect against bodily injury and a separate amount for property damage.
You may choose to go for the lowest limit your state allows or the highest available, depending on your personal preference and financial situation.
Let’s take a look at this coverage in detail to make sure you understand what you’re paying for.
Uninsured Motorist Bodily Injury Coverage
Remember, this is the part of this coverage designed to pay your medical bills.
Keeping that in mind, it’s recommended that you purchase as much coverage as you can afford. This coverage may be necessary even if you have health insurance.
Your health insurance coverage may include a high deductible and might force you to pay up to 20% or more of all medical costs after the deductible is satisfied.
For example, if you suffer $10,000 in bodily injury caused by an uninsured driver, your medical bills may look like this:
– $1,000 deductible (leaves $9,000.00 in unpaid expenses).
– $1,800 bill for your 20% share of the remaining $9,000.
That’s a total of $2,800 out of your own pocket for an accident you didn’t cause.
Paying a few hundred dollars annually for uninsured motorist coverage would eliminate this entire expense.
It’s important to note that you cannot have a higher uninsured motorist limit than your liability limit.
Basically, you cannot purchase more insurance to protect yourself than what you purchase to protect others!
Knowing this, you may have to raise your regular liability limits to make sure you have high enough limits for yourself.
It’s also worth pointing out that uninsured and underinsured motorist coverage are “policy-wide,” which means you do not get to pick and choose which person has this coverage.
If there are four drivers on your policy, they will all be covered if you add this coverage.
Uninsured Motorist Property Damage Coverage
Uninsured motorist property damage (UMPD) is liability coverage designed to pay for damage to your property, in most cases your car, in the event an uninsured motorist causes an accident that damages your vehicle.
Many people mistakenly believe their car is covered in the event described above if they have basic uninsured motorist or underinsured motorist liability coverage. This is not the case.
You must purchase uninsured motorist property damage coverage if you expect your insurer to cough up money to fix your car along with your broken arm.
What If I Already Have Collision Coverage?
You may not need UMPD if you have collision damage coverage on your policy.
Collision coverage will normally pay for damage to your vehicle if you are struck by an uninsured/underinsured motorist…but here’s the kicker; collision coverage may carry a much higher deductible.
There are some states where uninsured motorist coverage is not mandatory.
These states may force you to purchase a collision deductible waiver if you opt not to buy the uninsured motorist coverage.
Basically, you pay a little extra money to ensure you don’t get stuck paying your deductible if the damage to your vehicle is caused by an uninsured driver.
A couple items to note about uninsured motorist property damage and collision coverage:
– UMPD may be mandatory – depending on which state you live in.
– UMPD may be automatically added to your policy unless you specifically reject it when you purchase coverage – again, depending on which state you live in.
– UMPD cannot be purchased for only one vehicle per policy; it is liability coverage and therefore applies to every vehicle – you cannot do a mix-and-match of collision and UMPD by vehicle to save money.
This means it may be a good idea to purchase this coverage in the event you do not have physical damage coverage on every vehicle on your policy.
If you have an older car with liability-only coverage, UMPD would ensure you are compensated for damage if it was caused by an uninsured driver.
Read more: Do I need uninsured motorist coverage?