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Uninsured Motorist coverage is there to protect you. If you’ve ever been in an accident, you know the immediate, sickening feeling that follows. You also know how that feeling mounts when you start wondering if the at-fault driver has insurance or enough insurance to pay your damage or medical bills. Now imagine how sick you’d feel if you did find out the driver didn’t have coverage or speeds off, leaving you with the bill.
If the person that caused the accident is uninsured and can’t pay for your medical bills, legal costs, property loss, and other incidental expenses like lost wages, the Uninsured Motorist coverage on your policy would pay for these things. If you don’t have this coverage and the person at-fault doesn’t have insurance, you’re out of luck when it comes to recouping any damages, losses, or expenses you incurred from the accident. The only thing you could do is take the person to court and cross your fingers, but odds are, if they don’t have insurance, they’re probably not going to have thousands and thousands sitting in their checking account to pay for your damages. If you’re lucky, they’ll have assets that can be seized to pay for the judgment, like a home or savings, or have substantial wages to garnish. Once again, they probably don’t have enough in assets to cover your losses either. If they’re employed, their wages can be garnished until the judgment is paid, but states have limits on how much a person’s wages can be garnished, meaning it could take a very long time for you to see any compensation. Worse yet, wages can only be garnished if someone is employed and for as long as they stay employed. What happens if the person is self-employed, retired, or starts working under the table to avoid garnishment? Unfortunately, the odds are against you if you’re in an accident with someone who doesn’t have auto insurance.

The Sister Of Uninsured Motorists Coverage — UNDER-insured Motorists Coverage

Underinsured Motorist coverage helps pay for any differences in expenses and losses that you incur if the person who is at fault doesn’t carry enough insurance to pay for the damages. If your loss, damages, medical bills, or other expenses cannot be covered by the other person due to an insufficient amount of coverage, Underinsured Motorist coverage will kick in once your expenses have exceeded their limits.
For example, let’s say you’re in a not-at-fault accident and have a great insurance policy with comprehensive, collision, and bodily injury liability at $300,000 You’ve matched your Uninsured and Underinsured coverage limits to your liability limits — $300,000 in Uninsured and Underinsured coverage. Another driver runs a red light, crashes into you. You’re injured and accrue $100,000 in medical bills. Of course, the other driver is completely at fault, but the problem is that he only carries $25,000 in bodily injury liability. Obviously $25,000 isn’t enough to pay for your damages, but since you matched your Uninsured and Underinsured limits to your liability limits, your insurance will make up for what the other driver lacked and cover the difference. Your Underinsured Motorist would pay the $75,000 difference for your medical bills.
Another plus in that situation is that once you’ve reported the accident to your insurer and they’ve discovered the driver has insufficient coverage, your insurer would pay the difference immediately and then go after the driver to get paid back, known as subrogation. The other driver doesn’t get out of the financial responsibility, but it saves you the time of having to take the other driver to court, which is often a waste of time anyways. Insurers have deeper pockets and can absorb the risk of not being paid back quickly; that’s why you have insurance — so you don’t have to absorb a huge financial loss on your own. Since your insurer paid for your losses, you wouldn’t have to put your life on hold waiting for compensation.
Adapted from, InsuranceQuotes.org