Do You Need Uninsured or Underinsured Motorist Coverage?

What is uninsured and underinsured motorist insurance coverage?

Uninsured or underinsured motorist coverage is what pays your bills when the person who ran into you doesn’t have any insurance or has less insurance than is needed to cover the expenses. In the United States, one in seven motorists is uninsured, according to the Insurance Research Council. It also shows that the five states most likely to have uninsured motorists are Mississippi, New Mexico, Tennessee, Oklahoma, and Florida. In those states, you can expect that one out of every four cars coming your way is being driven by an uninsured motorist. The states with the lowest uninsured motorist rates are Massachusetts, Maine, Pennsylvania, New York, and Vermont. In these states, only one in 25 cars is likely to be driven by uninsured motorists.

Many states across the country actually require some level of uninsured/underinsured motorist protection coverage. However, none of the five states most likely to have such motorists require this coverage.

In this article, we’ll discuss why this type of insurance coverage is important for your auto insurance policy and if it’s right for you.

How much uninsured/underinsured coverage do you need?

So imagine you’re driving the family SUV to Orlando, and just as you’re pulling up to your hotel, you encounter that one driver in four who’s uninsured. His way of saying hello is to plow into you at a red light. As a result;

• The Family SUV has a severely dented bumper and tailgate that will cost $3,000 to fix.
• Your 8-year-old’s Nintendo goes flying and nips your wife’s cheek—bad enough to require an emergency room visit.
• The kids are freaked out; your first two days in Orlando are spent finding a body shop that can do quick repairs, and even so you’re likely going to have to miss a day or two at work getting the SUV back in shape.•

Luckily, you bought a good uninsured motorist policy, and, at least financially, everything’s okay. Your policy pays for the financial losses, including your minivan repairs, your wife’s emergency room trip, the lost wages, and even the broken Nintendo. It also covers the non-financial losses, with payments in recognition of the stress on the kids and the lost vacation time.

As with most insurance matters, you try to balance the risk you’re taking with the amount of premium you’re paying. If the medical bills were substantially higher and your uninsured motorist policy was low, you might not recover all of your losses. You may want to have limits for your uninsured/underinsured motorist policy as high as the limits you set for bodily injuries and personal property. That way, you’re covered no matter who caused the accident or what the financial situation of the other driver is.

The underinsured insurance kicks in when the other driver has insurance, but not enough to cover the losses. So in the Orlando example, the insurance company for a driver who only has what Florida requires—$20,000 total bodily injury liability, $10,000 personal—would pay for most, if not all, of the financial losses. They wouldn’t be likely to cover the non-financial losses, though.

Conclusion

Just like any form of insurance, you need to balance the risk you’re taking on with the amount of premium you’re paying. Everyone has a different level that they feel comfortable taking on for a different price. Uninsured or underinsured motorist coverage is no different. Depending on your situation, it might make more sense to have more coverage, i.e., how common uninsured drivers are in your state. If you want help deciding how much uninsured or underinsured coverage you need, contact us, and we will walk you through the process.