When you purchase auto insurance coverage, you may have the option of assign uninsured/underinsured coverage to your policy. This coverage, which is also referred to as UM/UIM, will help cover the expenses of your loss if a person damages your vehicle and does not have insurance or does not have enough insurance to cover all of the damage.

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How Could Someone Be Underinsured?

When you get in an accident that is not your fault, the person that caused the accident to occur may not have enough insurance to cover all of the damages. This is particularly true if you suffer extensive medical damage or if you have a particularly expensive vehicle.

When a person gets an automobile insurance policy, that policy has a cap on how much the insurance company will pay toward certain types of coverage. Once that cap is reached, the company will not pay any more expenses on the behalf of the person that caused the accident. While that person is still technically responsible for paying the rest of the damages, this is impossible if that person does not have insurance. As such, you might need to utilize the underinsured coverage of your policy to pay the remainder of your expenses.

Why Would I Need Uninsured/Underinsured Coverage on My Auto Insurance Policy?

Although every state requires its drivers to carry a certain amount of liability insurance, the minimum required amount simply may not be enough to cover the damage that person causes to you. In addition, many drivers still manage to drive without having the proper coverage. Although this person will be in legal trouble for failing to have coverage, that does little good for you when it comes ti getting your losses recovered.

Having uninsured/underinsured coverage on your policy is like an extra safety net that guarantees you do not find yourself in a difficult financial situation. In addition, if you have a particularly expensive vehicle, the coverage of the other driver may not be sufficient to cover the entire cost of repairing or replacing your vehicle.

Is There Anything Else I Need to Know About Uninsured/Underinsured Auto Insurance?

The guidelines surrounding uninsured/underinsured insurance are often changing. As such, it is important for you to ask your agent many questions and be sure to understand what is and is not included in this coverage.

The way your uninsured/underinsured insurance works may vary according to the state in which you live. For example, some states will allow you to turn down the insurance while others will not. In addition, some states will activate what is known as “phantom vehicle coverage” in cases where there is no evidence that contact occurred between two cars. An example of this would be when one car runs another off the road. Whether or not your state has a no-fault law in place can also impact the coverage. Therefore, it is important to be aware of your state’s laws in order to guarantee you get the best coverage possible for you and your situation.

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