Uninsured and Under-Insured Motorist
You are driving going to pick up your kid from practice at the school and you slow down for a red light and the car behind you slams into the back of your car. You are already running late and then when speaking with the person that hit you about your car insurance you find out the at-fault driver does not have coverage or is under insured. While most states require drivers to maintain auto insurance, according to recent study by the Insurance Research Council (IRC), one in eight motorists remain uninsured.
The IRC study indicates that the magnitude of the uninsured motorist problem varies widely from state to state. Uninsured motorist (UM) and under insured motorist (UIM) are coverage options added to your auto policy for transferring risk in such unfortunate circumstances.
In the event a driver or passengers are injured due to the negligence of an uninsured or under insured driver, you may seek compensation for injuries and damages through the UM and UIM portions of your policy:
- Uninsured motorist coverage is used when the at-fault driver cannot pay due to lack of insurance.
- Under insured motorist coverage is used when the driver’s liability limits are lower than the costs of the accident.
This video gives you a great visual of what uninsured and under insured motorist is and how it works on your policy.
The coverage typically has two components, but it varies from state to state. Learn what your states requires.
- Coverage for bodily injury provides insurance for things like medical bills, funeral expenses, lost wages, pain and suffering, disfigurement and permanent or partial disability.
- Coverage for property damage provides insurance for your auto repairs, a total loss, rental car and damage to personal items you had in the vehicle.
The following are additional coverage considerations:
- For UM/UIM to pay, it must be established that the other driver was at fault. Comparative negligence allows for more than one person to be at fault for an accident. As a result, your company can reduce the settlement of your uninsured/underinsured motorist claim by the percentage of fault attributable to you.
- UM coverage pays losses up to the coverage limits from an accident caused by a hit-and-run driver but be sure to report the accident promptly.
A risk management best practice for UM/UIM is to set the limits equal to your auto bodily injury and property damage limits. Since UM and UIM coverage protects you, adequate limits are critical. Please contact us to learn about all the limit options available and how you can be better protected.
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