Finance
Fact-checked

At SmartCapitalMind, we're committed to delivering accurate, trustworthy information. Our expert-authored content is rigorously fact-checked and sourced from credible authorities. Discover how we uphold the highest standards in providing you with reliable knowledge.

Learn more...

What is Underinsured Motorist Coverage?

Underinsured Motorist Coverage is a safeguard for you when the at-fault driver's insurance can't cover your total loss or medical expenses after an accident. It's your financial shield, ensuring you're not left paying out of pocket for the unforeseen. Have you considered how well your policy protects you in such scenarios? Let's examine the importance of adequate coverage.
Michael Pollick
Michael Pollick
Michael Pollick
Michael Pollick

State laws generally require all drivers to carry at least a minimal amount of liability insurance before they can operate a vehicle legally. The problem with these well-intentioned laws, however, is that not all drivers actually comply, or else they may only purchase enough insurance coverage to meet a minimal standard. Drivers who want to protect themselves financially from an encounter with an uninsured or underinsured motorist may want to consider adding underinsured motorist coverage to their existing insurance package.

Underinsured motorist coverage, often bundled together with uninsured motorist coverage (UM/UIM), is designed to cover the difference between the at-fault driver's maximum pay-out and the actual cost of medical bills incurred by the other driver. If an underinsured driver's liability insurance only pays a maximum of $20,000 US Dollars (USD) and the total damage to the other driver's car is $30,000 USD, for example, the victim's coverage should pay the $10,000 USD difference. It should be noted that, in most cases, UM/UIM coverage only covers medical expenses; uninsured motorist property damage (UMPD) coverage may be necessary to cover non-medical expenses.

Vehicles involved in serious wrecks might be protected by underinsured motorist coverage.
Vehicles involved in serious wrecks might be protected by underinsured motorist coverage.

Getting an insurance company to recognize the claim against an underinsured motorist may prove to be a challenge. The at-fault driver's liability or collision or medical coverage must first be considered maxed out. The driver's insurance company simply has no more money which can be applied to the damages or injuries. The victim has the burden of proof to demonstrate the additional uncovered damages or injuries are accurate and documented.

In most cases, underinsured motorist coverage only pays for medical costs, and a separate policy may be necessary to cover vehicle repairs.
In most cases, underinsured motorist coverage only pays for medical costs, and a separate policy may be necessary to cover vehicle repairs.

Some drivers choose not to add the additional premiums for underinsured motorist coverage to their existing car insurance policy because they believe other forms of insurance may cover the excess. For instance, personal medical insurance often covers the medical expenses incurred during an automobile accident. Having duplicate medical coverage with a rider covering uninsured motorists might be considered redundant by some.

State laws typically require all drivers to carry at least a minimal amount of liability insurance before they can operate a vehicle legally.
State laws typically require all drivers to carry at least a minimal amount of liability insurance before they can operate a vehicle legally.

In reality, automotive underinsured motorist coverage can provide even more financial protection for drivers and passengers involved in serious wrecks. Personal health insurance may only cover the injuries of the policy holder and certain dependents, but underinsured motorist coverage can cover all of the passengers in a vehicle, even those who are not covered by the driver's personal medical insurance.

Many insurance agencies strongly recommend that drivers who can afford the nominal addition to their monthly premiums should consider uninsured/underinsured motorist coverage, since there may be a considerable number of drivers on the road who are uninsured or underinsured. The additional expense added to the premium is nominal compared to the amount of uncovered damage an unemployed or underemployed driver can cause in a serious accident with multiple injuries and heavy property damage.

Michael Pollick
Michael Pollick

A regular SmartCapitalMind contributor, Michael enjoys doing research in order to satisfy his wide-ranging curiosity about a variety of arcane topics. Before becoming a professional writer, Michael worked as an English tutor, poet, voice-over artist, and DJ.

Learn more...
Michael Pollick
Michael Pollick

A regular SmartCapitalMind contributor, Michael enjoys doing research in order to satisfy his wide-ranging curiosity about a variety of arcane topics. Before becoming a professional writer, Michael worked as an English tutor, poet, voice-over artist, and DJ.

Learn more...

You might also Like

Discussion Comments

anon151202

What do you mean (compared to the amount of uncovered damage an unemployed or underemployed driver can cause) I would think that an unemployed driver would not be in a hurry to get to work on time and thus would be the safe driver on the road. I am an unemployed driver and I notice people are always in a hurry to get around me and I'm doing the speed limit. add that to your premiums.

Post your comments
Login:
Forgot password?
Register:
    • Vehicles involved in serious wrecks might be protected by underinsured motorist coverage.
      By: Kadmy
      Vehicles involved in serious wrecks might be protected by underinsured motorist coverage.
    • In most cases, underinsured motorist coverage only pays for medical costs, and a separate policy may be necessary to cover vehicle repairs.
      By: lupoalb68
      In most cases, underinsured motorist coverage only pays for medical costs, and a separate policy may be necessary to cover vehicle repairs.
    • State laws typically require all drivers to carry at least a minimal amount of liability insurance before they can operate a vehicle legally.
      By: Lisa F. Young
      State laws typically require all drivers to carry at least a minimal amount of liability insurance before they can operate a vehicle legally.