What is Underinsured Motorist Coverage (UIM)?
One kind of vehicle insurance is underinsured motorist coverage. If someone causes an accident that you are involved in and their insurance is insufficient, it protects you. Generally speaking, your insurance carrier will pay the remaining amount if the at-fault driver’s policy has a maximum that is less than the cost of the damage to your car or your medical costs, and you have UIM coverage.
Each state has its definition of “underinsured” and rules regarding UIM coverage. Underinsured motorist coverage is necessary in some areas; in others, it may be added to your auto insurance policy as an endorsement.
The Operation of Underinsured Motorist Coverage
Imagine if you were not at fault in an automobile accident. Once everyone is safe, you take pictures of the damage, exchange information with the other motorist, and then submit a claim to your insurance provider. However, the other driver just had the bare minimum of liability coverage, which will need to be increased to pay for your damaged vehicle’s repairs when your insurance contacts their insurer to request payment. Up to the policy maximum, your underinsured motorist coverage will take effect and pay the extra expenses.
Typically, underinsured motorist coverage consists of two components:
- Coverage for bodily injuries, which may pay for missed income in addition to medical expenses
- Coverage for property damage, which pays for the price of fixing or replacing your car
- Nevertheless, only UIM bodily injury coverage is offered in certain areas.
- A claim may not cover more than the expenses incurred as a direct consequence of the accident.
The Advantages of Underinsured Auto Insurance
Except for New Hampshire, every state requires liability insurance, which covers the cost of damages resulting from an accident in which you are at fault. In Virginia, drivers can forego getting insurance in exchange for a $500 yearly charge.
Every state determines the minimum coverage quantities that are necessary. However, following a significant collision, the state minimum sum may not be sufficient to pay for your car’s repairs or replacement or to cover your medical expenses while you heal from your wounds. That’s why having underinsured motorist coverage comes in handy. Your UIM coverage will pay the remaining amount, up to the limits of your policy, if you are in an accident and the at-fault driver’s insurance does not cover the cost of the crash’s losses.
When you have numerous cars on a single policy, you may be able to “stack” or combine your coverage limits for UM/UIM bodily injury coverage. Some states and insurance providers permit this. You can stack your policies to increase the maximum amount after an accident to $70,000, for instance, if your policy covers two cars with $35,000 UIM coverage limits each.
When is underinsured auto insurance necessary?
Connecticut, Kansas, Maine, Maryland, Minnesota, Nebraska, North Carolina, North Dakota, Oregon, South Dakota, and Vermont mandate UIM coverage.
Additionally, if you decide to get auto insurance in Rhode Island, New Hampshire, or Virginia, or if you want to carry higher liability coverage than the state minimum, you must have it.
You must get UIM coverage if you choose a UM coverage limit in Illinois that is more than the minimum the state allows. If you choose standard car coverage in New Jersey, you must have UIM; a basic policy does not.
What Does Underinsured Motorist Coverage Include?
Usually, underinsured motorist coverage consists of two components: UIM property damage pays for replacing or repairing your car. At the same time, UIM bodily injury covers medical expenses and maybe lost income. Both coverages cover costs beyond the at-fault driver’s insurance maximum. However, in some states, only UIM bodily injury coverage is offered.3. Ask your insurance agent or your state’s Department of Motor Vehicles if you need clarification on the requirements in your area.
Does underinsured motorist insurance cover hit-and-runs?
No, since UIM coverage kicks in when the motorist doesn’t have adequate insurance, it doesn’t apply to hit-and-run incidents. A hit-and-run driver is frequently considered an uninsured motorist since they were not recognized; hence, underwriting coverage is usually applicable. You could also need collision coverage in certain states. Consult your insurance representative if you need clarification.
The Final Word
Underinsured motorist coverage comes to your rescue if another driver causes an accident and their insurance is insufficient to cover your medical bills and property damage. In some states, it is a mandatory endorsement; in others, it is an elective one.
Conclusion
- Underinsured motorist coverage offers protection if the negligent driver’s insurance cannot pay for all losses.
- Underinsured motorist coverage is mandatory in some areas, but it may also be an optional addition to a vehicle insurance policy in others.
- Unlike uninsured motorist coverage, which shields you if the at-fault driver is not covered by any insurance, underinsured motorist coverage.
