Uninsured/underinsured motorists coverage on an auto policy (also known as UM/UIM) is an important coverage component all drivers should have. This coverage protects drivers in situations where they are involved in an auto accident with a driver who carries minimal insurance limits or is driving without any insurance at all (a common occurrence, unfortunately).
Understanding Uninsured and Underinsured Coverage
- Let’s see how UM/UIM coverage would work:
- If you are involved in an accident with a person carrying very low limits of liability and they are at-fault, this person’s policy would pay out to whatever limit of property damage and bodily injury liability their policy has and that’s it – their insurance company would effectively walk away, having met their contractual obligation.
Next in line would be your own policy – the one containing the UM/UIM coverage you purchased. We recommend customers take high limits of this coverage so that you are properly protected in situations such as these. Your own policy would respond to pay for property damage to your vehicle or other property above what the other party’s policy was able to pay, subject to a $500 deductible. If you are also seriously hurt in this accident and sue the other party, the same applies – the insurer for the other party would pay to whatever bodily injury limit their policy allows and walk away, leaving your policy to pay the balance of any judgment you may win against the other party for bodily injury.
- If the other party did not have any auto insurance at all in this scenario, then your policy would be primary and respond to cover your property damage and bodily injury subject to the limits of your own policy.
- Additional UM/UIM coverage, beyond the limits available on your auto policy, are available through an umbrella policy. This coverage would provide up to an additional $1.25 million dollars in coverage in the event of a serious injury. If you have a disabling injury and cannot work in the same profession or job, this coverage would be of vital importance to maintain your finances.