You’re driving to work one day, mindful of traffic, obeying traffic laws, and generally minding your own business. Out of nowhere, a car runs a traffic light and you’re involved in a serious accident. The police and emergency responders arrive at the scene, everyone is taken to the hospital to be checked out, and your cars are towed to the repair shop.
You feel confident everything will be taken care of. You were not at fault. The other driver’s auto insurance policy will cover your vehicle damages and medical bills.
Then you find out that the other driver has no insurance. Now what?
Understanding Uninsured Motorist Coverage
Most states now require all drivers to purchase uninsured motorist coverage. The minimum amount of coverage you can purchase is usually similar to the minimum level of liability coverage you purchase. Most people choose to purchase the same limit of uninsured motorist coverage as liability coverage.
You aren’t allowed to buy a minimum level of liability coverage and then a higher level of uninsured motorist coverage. In other words, you must be willing to do for others what you would do for yourself.
Uninsured motorist coverage for bodily injury can be purchased in either a split limit or a combined single limit. A split limit will give you a certain amount of money per person with a maximum per accident. If, for example, you buy a $50k/$100k limit, you’d receive up to $50,000 for yourself and $50,000 for the other passenger in your car, up to $100,000. If there were 5 people in your car, each with serious injuries, you’d be limited by the maximum of $50,000 per person until the $100,000 runs out.
A combined single limit says you have a $100,000 limit no matter how many people are involved. You could have one person with $20,000 worth of injuries and another with $80,000; or 10 people with $10,000 worth of injures each. There is no limit to the way the coverage can be split, if needed.
Uninsured motorist coverage for property damage covers the damage to your property or vehicle caused by the other at-fault driver. This section of the policy will have a set limit and may or may not be offered in your state.
Uninsured versus Underinsured
Uninsured drivers have no coverage at all. Underinsured drivers usually have the minimum allowable coverage but don’t have enough to pay for all expenses associated with a more costly accident. In the case of the latter, your underinsured motorist coverage would make up the difference.
In some states, uninsured and underinsured motorist coverage is listed separately on an automobile insurance policy. In others, both are covered by the uninsured motorist limits. Check with your insurance agent to make sure you have the right options.
According to the Insurance Research Council, nearly 1 in 7 drivers is currently without automobile insurance. The cost of uninsured motorist coverage is generally very low. Talk to your insurance agent to make sure you have the proper limits and to discuss increasing the amount of coverage you currently carry, if necessary. The difference in cost is worth the added peace of mind.