Is Underinsured Motorist Coverage Required?
UIM coverage isn’t mandatory in every state, but it’s highly recommended. Some states, like Connecticut and Maryland, do require drivers to carry UIM as part of their auto insurance policies. However, even in states where it’s optional, skipping out on this coverage is a risk. The financial burden of an accident where the other driver lacks sufficient insurance can be devastating.
Scenarios Where UIM Becomes Essential
Imagine driving on a rainy night when someone rear-ends you. You’re injured, and your car is significantly damaged. The other driver, unfortunately, has only the state minimum coverage of $20,000 for bodily injury, but your hospital bills alone are $40,000. Your UIM coverage steps in and pays the additional $20,000. Without it, you’d have to cover the difference out of pocket or pursue the other driver in court, which can be time-consuming and costly.
Now, think about the expenses beyond medical bills: physical therapy, car repairs, even time off work. With UIM, all these aspects are accounted for, making sure you’re financially secure while recovering.
How to File a Claim for Underinsured Motorist Coverage
Filing a claim for UIM isn’t as complicated as it might seem. Here are the steps:
- Gather Information: After the accident, collect the at-fault driver’s insurance details and document everything from medical reports to vehicle damages.
- File a Report: Report the accident to your insurance company as soon as possible.
- Assess Damages: Work with your insurer to determine the total cost of the accident. If it exceeds the at-fault driver’s policy, your UIM will cover the remaining amount.
- Negotiate with Your Insurer: In some cases, there might be negotiation over the payout. Always be prepared with documentation to support your claim.
- Receive Compensation: Once everything is settled, you’ll receive compensation for your medical bills, property damage, and other related costs.
The Cost of Underinsured Motorist Coverage
Adding UIM coverage to your policy doesn’t have to break the bank. In most cases, it’s relatively affordable compared to other types of auto insurance. The price will vary depending on your location, driving history, and the amount of coverage you choose. Typically, it adds around $50 to $100 annually to your policy—a small price to pay for the protection it offers.
UIM Coverage for Multiple Vehicles
If you own more than one car, you might wonder if you need UIM coverage for each vehicle. The answer depends on how your policy is structured. Some insurance providers offer stacked coverage, meaning your UIM limits apply to all your vehicles. For example, if you have $50,000 in UIM coverage on two cars, stacked coverage would give you a total of $100,000 in protection. However, this comes at an additional cost. Non-stacked coverage, on the other hand, applies only to individual vehicles.
UIM Coverage for Passengers
Did you know that UIM coverage also extends to passengers in your vehicle? If a passenger is injured during an accident caused by an underinsured driver, your policy can help cover their medical expenses as well. This makes UIM even more valuable, ensuring everyone in your vehicle is protected.
UIM vs. Personal Injury Protection (PIP)
Some drivers assume that if they have Personal Injury Protection (PIP), they don’t need UIM. However, these coverages serve different purposes. PIP covers medical expenses and lost wages regardless of who is at fault, but its limits are often low and don’t cover non-medical costs like vehicle repairs. UIM is specifically designed to fill the gaps left by the at-fault driver’s inadequate insurance, offering broader protection.
Table: A Plan for UIM Coverage
| Action Step | Description | Recommended Coverage |
|---|---|---|
| Assess Your Risks | Evaluate the likelihood of being in an accident with an underinsured driver. Consider your health and car’s value. | Match UIM limits to liability coverage. |
| Choose Bodily Injury Coverage | Protect against medical expenses and lost wages if injured by an underinsured driver. | $100,000 per person, $300,000 per accident |
| Choose Property Damage Coverage | Cover vehicle repairs if an underinsured driver is at fault. | $50,000 or higher, depending on vehicle value |
| Consider Stacked Coverage | For multiple vehicles, stack UIM limits for added protection. | Varies by insurance provider and number of vehicles |
| Review Annually | Regularly check coverage levels and update as needed based on life changes. | Ongoing |