No one likes being in a road accident or a collision. It causes physical, emotional, psychological, and financial harm to the victim (and others). However, such accidents cannot be fully avoided. Defensive driving courses can help only to a certain extent, isn’t it?
So how do you manage the expenses of the traffic accident, especially if you end up as the victim? The driver’s liability insurance should cover your expenses. But what if they don’t? What if your expenses are more than the driver’s maximum coverage amount?
That’s where underinsured auto insurance cover helps. Continue reading to know more!
What is Underinsured Auto Insurance Cover?
Underinsured motorist insurance coverage is an add-on but compulsory in about a dozen states in the US. The insurance cover is activated when the driver responsible for the accident cannot fully pay the expenses through their liability insurance.
Many insurance companies offer underinsured coverage and uninsured coverage to help their customers have complete auto insurance. Naturally, it affects the premium amount but is still negotiable. You can still find the cheapest rates for vehicle insurance talking to an insurance agent and comparing multiple quotes before finalizing the insurer.
How it Works
An underinsured motorist is the one who has liability coverage that doesn’t pay enough for all the damages of an accident. People who opt for low-cost insurance that satisfies the state’s minimum liability limit fall into this category.
If such a person were to cause an accident, the victim (the other party) will not get sufficient money from the insurer to pay all the bills. But it’s not fair that the affected/ injured party has to pay the remaining bills.
In such instances, injured party with underinsured auto coverage can ask their insurer to pay the remaining bills. You can cover bodily injury expenses since the minimum limit in some states is $15K, and the medical bills could very well exceed this amount.
Your regular vehicle insurance should do the job if they include a clause for such accidents. However, the money allotted to it might not be enough for the remaining bills. Underinsured coverage is useful for people who have medical conditions or sensitive health. It is also helpful if you own an expensive vehicle as the repair fees will also be high.
In Virginia, auto insurance is not compulsory if you show proof that you can pay for the damages of an accident. However, if you still want car insurance, you should include underinsured coverage and uninsured coverage in the policy. This rule is non-negotiable.
A similar rule is applicable in New Hampshire. The difference is that the uninsured motorist bodily injury coverage includes coverage for the underinsured too. You don’t need to opt for both separately in New Hampshire.
Underinsured Cover Vs. Uninsured Cover
The basic difference between the two covers is indicated by their titles.
- The underinsured cover is when the person who causes the accident cannot fully pay for the expenses as the bills exceed the maximum payable limit of their liability coverage.
- An uninsured motorist is a person who doesn’t have a liability insurance cover that can pay the injured party after an accident.
Each state mentions how much minimum underinsured motorist coverage you should have. While the limit is less than the limit for other covers, you have the choice to increase it. However, the premium may be higher.
You can also stack the underinsured coverage with other auto insurance covers, according to some state laws. Stacking is nothing but combining the limits for numerous vehicles so that the overall limit increases. This is helpful for people who own more than one vehicle. A person with three vehicles can get triple the maximum limit as underinsures coverage if they choose to stack.
Types of Underinsured Auto Insurance Coverage
Underinsured coverage is of two types, just like liability coverage.
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For Bodily Injury
Underinsured coverage for bodily injury provides protection for the insured and others in the vehicle when the accident occurs. It’s important to note that personal injury protection is not enough for drivers. Underinsured coverage is a must if you don’t want to pay the medical bills from your pocket.
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For Property Damage
This coverage is to pay for car damages after a collision. Underinsured coverage for property damage can help cover collision deductibles, rental charges, and more. It ensures that you don’t have to spend your money to get the car repaired. The premium you’ve been paying for the insurance with underinsured coverage will take care of this.
Conclusion
It is possible to obtain affordable auto insurance with adequate underinsured and uninsured motorist coverage. You just need to be patient and get quotes from different insurance companies to compare the premium and clauses. Better be safe and protected by insurance than the risk it.
