What is Uninsured/Underinsured Motorist Protection?
Uninsured or underinsured motorist protection coverage is what pays your bills when the person who ran into you doesn’t have any insurance or has less insurance than is needed to cover the expenses.
Nationwide, one in seven motorists is uninsured, the Insurance Research Council reports. Its most recent figures, compiled in 2009, show the five states most likely to have uninsured motorists are Mississippi, New Mexico, Tennessee, Oklahoma and Florida. In those states you can expect that one out of four cars coming your way is being driven by an uninsured motorist. The states with the lowest uninsured motorists rates are Massachusetts, Maine, Pennsylvania, New York and Vermont. Only one in 25 cars in those states is likely to be driven by uninsured motorists.
Twenty states require their registered drivers to carry uninsured/underinsured motorist protection coverage. Oddly, none of the five states most likely to have such motorists require the coverage, while four of the five states least likely to have them do require the coverage (Pennsylvania is the exception), according to the car website Edmunds.com.
How much uninsured/underinsured coverage do you need?
So imagine you’re driving the family minivan to Orlando and just as you’re pulling up to your hotel, you encounter that one driver in four who’s uninsured. His way of saying hello is to plow into you at a red light.
As a result:
· Your minivan has a bashed bumper and tailgate that will cost $3,000 to fix.
· Your 8-year-old’s Nintendo goes flying and nips your cheek – badly enough to require an emergency room visit.
· Your kids are freaked out, your first two days in Orlando are spent finding a body shop that can do quick repairs, and even so you’re likely going to have to miss a day or two at work getting the van back in shape.
But you bought a good uninsured motorist policy and, at least financially, everything’s okay. Your policy pays for the financial losses, including your minivan repairs, your emergency room trip, the lost wages and the broken Nintendo. It also covers the non-financial losses, with payments in recognition of the stress to the kids and the lost vacation time.
As with most insurance matters, you try to balance the risk you’re taking with the amount of premium you’re paying. If the medical bills were substantially higher and your uninsured motorist policy was low, you might not recover all of your losses.
You may well want to have limits for your uninsured motorist policy as high as the limits you set for bodily injuries and personal property. That way, you’re covered no matter who caused the accident and no matter what the financial shape is of the other driver.
The underinsured insurance kicks in when the other driver has insurance, but not enough to cover the losses. So in the Orlando example, the insurance company for a driver who only has what Florida requires -- $20,000 total bodily injury liability, $10,000 personal – would pay for most if not all of the financial losses. (Of course, you can’t claim the same amount from your insurance company once the other driver’s company has covered it.) They wouldn’t be likely to cover the non-financial losses, though. Talk to an independent insurance agent to determine what best suits your situation.