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What Are Uninsured and Underinsured Motorist Coverage, and Why Are They Important?

If asked about the insurance policy on their car, pickup, or motorcycle, most drivers would be able to discuss their liability coverage, and many could tell you the amount of liability coverage that they have. Many drivers, however, are less familiar with two other types of coverage found in most policies - uninsured motorist coverage and underinsured motorist coverage.

Liability coverage protects you in the event that you cause an accident, such as by paying to repair the other party's vehicle, paying for the other party's medical expenses if he/she is injured, paying for an attorney to defend you if you are sued, etc. Uninsured motorist coverage and underinsured motorist coverage also protect you, but in a different way.

Uninsured Motorist Coverage: Generally, if you are injured by a driver that does not have insurance (i.e., an "uninsured motorist"), uninsured motorist coverage enables you to recover for your injuries/damages from your own insurance company. As an example, if the uninsured motorist coverage limit under your policy is $100,000, and you are injured by a driver that does not have insurance, you could potentially recover up to $100,000 from your insurance company depending upon the extent of your injuries/damages.

Underinsured Motorist Coverage: Generally, if you are injured by a driver that has insurance, but his/her insurance is insufficient to compensate you for your injuries/damages (i.e., an "underinsured motorist"), underinsured motorist coverage enables you to recover additional compensation for your injuries/damages from your own insurance company once you have exhausted the at-fault driver's liability coverage. As an example, if the underinsured motorist coverage limit under your policy is $100,000, and you are injured by a driver that has only $25,000 in liability coverage, you could potentially recover an additional $75,000 from your insurance company (i.e., the difference between your underinsured motorist coverage limit of $100,000 and the at-fault driver's liability coverage limit of $25,000). However, using this same example, if the underinsured motorist coverage limit under your policy is $50,000, you could only potentially recover an additional $25,000 (i.e., the difference between your underinsured motorist coverage limit of $50,000 and the at-fault driver's liability coverage limit of $25,000). As before, whether you could recover an additional $25,000 would depend upon the extent of your injuries/damages.

Aside from the fact that it is legally required, liability insurance is important because it protects you, financially, in the event that you cause an accident. However, uninsured motorist coverage and underinsured motorist coverage are equally important because they may be your only source of compensation if you are injured by a driver who is uninsured, or whose insurance limits are woefully inadequate to compensate you for your medical bills, lost wages, and pain and suffering. Talk with your agent about the uninsured motorist coverage and underinsured motorist coverage available under your car, pickup, or motorcycle insurance policy, particularly the amount of coverage that you have. Making sure that you have sufficient coverage will give you peace of mind knowing that compensation will be available in the event that you are injured by an uninsured or underinsured motorist.

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