Uninsured motorist coverage is an elective part of an auto insurance policy that pays you for damages and injuries if you are hit by someone who doesn’t have insurance. This is when you have damages to your car from a not-your-fault accident.
Limits of Uninsured Motorist
Uninsured motorist is not a required coverage in all states. As an optional coverage, you can select how much coverage you want. The policy will pay based on the coverage limits. You can select coverage equal to or lesser than the liability coverage you have elected for the primary portion of your auto insurance policy.
For example, assume the state minimum for liability coverage is $15,000 per person, $30,000 per accident, $10,000 for property damage. You have a leased car with $100,000 per person, $300,000 per accident, and $100,000 for property damage. You can elect to have uninsured motorist liability coverage for the state minimum or increase it based on increments up to the $100,000/$300,000/$100,000 limit. You can’t select more uninsured motorist than what you offer in liability coverage to others.
Uninsured Motorist vs. Collision Coverage
Uninsured motorist works the same way that liability coverage works, except you’re getting it to protect yourself and your passengers from another person’s liability. Collision coverage repairs your car in an accident. Here’s what happens with collision insurance coverage: you hit another car leading to damage to the car and whiplash to the driver. Your car also sustains damage.
Your liability coverage pays for the damages and injuries to the other person. Your collision coverage pays for the damages to your car less your deductible.
If we assume the opposite scenario where you are hit by another person but they don’t have insurance, here’s what would happen. If you have uninsured motorist, your car damages and injuries are paid for by that line coverage of your policy. If you don’t have uninsured motorist, you could use your collision coverage and pay the deductible to get your car fixed. But it’s important to remember that not everyone carries collision coverage – this is optional in most places as well and without uninsured motorist, you’d have no coverage if the other party didn’t have insurance.
Uninsured Motorist vs. Underinsured Motorist
It is also possible that a person has insurance but they carry the state minimum or another low value that doesn’t cover all of your damages or injuries. This is where underinsured motorist coverage kicks in. It can be included with uninsured motorist or added as a separate line item.
What happens if you are hit by someone who doesn’t have enough insurance? Assume you have a high-end car and are hit by someone who is carrying state minimum coverage of $15,000/$30,000/$10,000. The damage to your car is $25,000 which is not nearly enough in what the other party has covered ($10,000 property coverage). If you have underinsured motorist, your policy will pay the difference in damages – the remaining $15,000.
Choosing to get uninsured motorist coverage is a key way to make sure you are compensated for damages and injuries you incur when another driver hits you but doesn’t have insurance. Making sure you have enough coverage to protect your vehicle and serious injuries prevents financial hardships or the inability to care for your own needs. At the end of the day, uninsured motorist is there to ease a healthy skepticism about the financial responsibility of other drivers.