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Underinsured vs. Uninsured Motorist Coverage: What's the Difference?

While budgeting for extra insurance may be a pain, it can be necessary in many cases (especially if you want to avoid taking on debt after an accident). With one in eight drivers lacking insurance of any kind, you have a significant risk of getting into a collision with an uninsured driver. Unfortunately, it's impossible to make sure that every driver obeys the law and insures their vehicle. But there is a way you can protect yourself in these instances: with uninsured and underinsured motorist coverage.

What is Uninsured Motorist Coverage?

In basic terms, uninsured motorist insurance is a type of policy that covers you when you are involved in an accident with a driver lacking insurance. Typically, a driver without auto insurance wouldn't have any way to pay for the damages inflicted on your car or person. Of course, you can take them to court, but this can be a lengthy process that may end up costing you money in the end. In 20 states and the District of Columbia, drivers must have either uninsured or underinsured motorist coverage.

What Does Uninsured Motorist Insurance Cover?

Depending on what insurance company you do business with and what state you drive in, uninsured motorist insurance will cover any damage done to your vehicle during the collision or accident and any injuries you suffer from the incident. Uninsured insurance differs from full coverage because it only kicks in if the other driver lacks an insurance policy. Uninsured motorist policies also apply if the driver flees the scene, committing a hit-and-run. Of course, this doesn't apply to all policies, and you should call your insurance representative to see what your specific plan covers.

What is Underinsured Motorist Coverage?

While underinsured motorist insurance is similar to uninsured coverage, it differs because the at-fault driver, in this case, will have some level of insurance. They may have the absolute minimum coverage, like a low-cost liability plan; with many of these plans, insurers won't be able to cover the total cost of your vehicle damage or medical bills. In this case, you would need to either pay for damages on your own, sue the other driver, or (hopefully) file a claim with your insurance. Much like uninsured motorist coverage, underinsured coverage is required in many states, with the two policies often bundled together.

What does Underinsured Motorist Insurance Cover?

Underinsured motorist coverage will cover damage to your vehicle and injuries if the driver who was at fault had liability limits that were too low to cover all the expenses. Once an accident has occurred and both companies are able to do an investigation, the at-fault driver's insurance will cover the costs up until the limits of their policy. In contrast, your insurance will cover anything that remains. What your insurance will cover will depend on your policy, with some companies having separate plans for bodily injury compared to vehicular damage.

What's the Difference Between Uninsured and Underinsured Coverages?

The main difference between these two coverage types is the level of insurance the at-fault driver has. For uninsured insurance to payout, the other driver has to have no insurance at all. For underinsured insurance coverage to kick in, the driver should have some insurance (usually the minimum liability their state allows) but not enough to cover the expenses of the accident. Both insurance types can save you hundreds or thousands of dollars in these specific incidents, which would otherwise come out of your pocket. There may also be differences in what the policies cover when it comes to personal injuries vs. vehicle damage. You'll want to discuss the particulars of each policy with a representative when you set up a plan to fully understand what level of coverage you'll have in an accident.

Do I Need Uninsured/Underinsured Motorist Coverage?

20 states require having uninsured or underinsured motorist coverage by law. In addition to the District of Columbia, these states include:

  • Connecticut
  • Illinois
  • Kansas
  • Maryland
  • Maine
  • Massachusetts
  • Missouri
  • Minnesota
  • New York
  • New Hampshire
  • Nebraska
  • North Dakota
  • South Dakota
  • North Carolina
  • South Carolina
  • Oregon
  • Vermont
  • Virginia
  • West Virginia
  • Wyoming

Even in states where this type of insurance isn't required by law, it's still a good idea to have it if you can fit the policy into your budget. Getting into an accident with an uninsured or underinsured driver can be a huge hassle. You may be injured after an accident or dealing with a completely non-functional vehicle, and the financial burden of dealing with these expenses can be incredibly stressful. It's much easier to allow insurance companies to deal with the fallout, so you can get back to living your life.

How Much Can I Get From an Uninsured Motorist Claim?

How much you'll get from your uninsured motorist claim will depend on a variety of factors, including:

  • Your insurance company
  • Your exact policy type
  • What type of vehicle you drive
  • Whether you were injured
  • How much damage occurred

In some cases, you can get as much as 100% of your expenses covered by a claim payout, including any wages you lost due to the accident. Your payout from an underinsured policy will be similar, except the money will come from both the at-fault driver's insurance company and your own. The other party's insurance will cover damages until they reach their policy limit; from there, your insurance will cover the rest of the expenses.

How Can I See if a Used Car has Been in an Accident?

Even if you get uninsured or underinsured insurance, you may find yourself wanting a different vehicle after getting into an accident. But how can you tell whether that vehicle has any accident history? The best way to ensure you are getting a car with a clean accident history is with a vehicle history report. These reports can give you all the information you need to make an informed car-buying decision. With details like accident history, the number of previous owners, manufacturing origins, and much more, these free tools will assist you in getting the best possible deal and help you avoid getting scammed.

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