When drivers are looking for coverage, they need to understand what all their options are. The question, “What does uninsured/underinsured auto insurance mean?” is an important one. This type of coverage is not required in all states, but all drivers should consider adding it to their auto insurance coverage.
Uninsured/underinsured auto insurance is a type of coverage which protects the policyholder and his or her own passengers if an accident occurs. It pays for personal injury claims as well as the cost of repairs to the policyholder’s own vehicle in certain circumstances.
Tort States and Auto Insurance
In a tort state, the driver who was responsible for causing an accident is also responsible for compensating the occupants of the other vehicle for their injuries and damaged property. Under this type of system, the at-fault driver (through his or her insurance company) pays for the medical bills and lost wages incurred by the other driver and his or her passengers following the accident.
What happens if the at-fault driver doesn’t have insurance or left the scene of the accident before his or her identity could be ascertained? How can an injured person get the compensation here she is entitled to if the at fault driver doesn’t have enough insurance in place to fully pay for the damages? In these types of situations, the uninsured/underinsured auto insurance coverage would come into play.
Uninsured/Underinsured Auto Insurance Explained
Uninsured auto insurance coverage pays for injuries and damages sustained by the policyholder, his or her family members and passengers riding his or her vehicle when the driver responsible for causing the accident does not have auto insurance coverage. It is also used when the accident was a hit-and-run, and the at-fault driver cannot be identified.
Underinsured auto insurance is a little different. It is used when the driver responsible for causing the accident has some coverage but his or her policy limit is not high enough to pay for the damages caused. While most parts of the United States have a minimum level of coverage which must be kept in place, these limits are usually relatively low and may not be sufficient if the accident caused permanent injuries and a high level of economic loss. In this situation, the at-fault driver’s auto insurance coverage will pay out up to the policy limit which is in place and the underinsured auto insurance is used to make up the difference (up to its policy limit).
There is no set rule about how much uninsured/underinsured auto insurance coverage a driver needs, but it is a good idea to match the level of bodily injury and property damage liability insurance coverage which is on the policy. The uninsured/underinsured coverage can be added to an existing policy very easily, and is an excellent investment in case an accident occurs. When looking for new coverage, make sure that the quote includes uninsured/underinsured auto insurance.