insurance

Underinsured Motorist Coverage

Auto insurance coverage that protects you when you're injured by a driver who has insurance, but their coverage limits are insufficient to pay for your damages. This coverage pays the difference between the at-fault driver's limits and your actual losses, up to your policy limits.

Example

“When the at-fault driver's $50,000 policy couldn't cover Lisa's $150,000 in medical expenses, her underinsured motorist coverage paid the additional $100,000.”

Memory Tip

Remember 'UIM fills the gap' - Underinsured Motorist coverage fills the gap between what the other driver has and what you need.

Why It Matters

With many drivers carrying only state minimum coverage, which can be as low as $25,000, this protection is essential for covering medical bills, lost wages, and pain and suffering that exceed those limits. Without it, you might have to sue an underinsured driver personally, often collecting little or nothing.

Common Misconception

People often think this coverage is unnecessary if they have good health insurance, but health insurance doesn't cover lost wages, pain and suffering, or other damages available through underinsured motorist coverage. Additionally, using health insurance may still leave you with significant deductibles and co-pays.

In Practice

You're severely injured in an accident caused by a driver with $30,000 in liability coverage, but your medical bills, lost wages, and other damages total $200,000. If you have $250,000 in underinsured motorist coverage, you would receive $30,000 from the at-fault driver's insurance, then your underinsured motorist coverage would pay an additional $170,000 ($200,000 total damages minus the $30,000 already received), fully covering your losses.

Etymology

This coverage type developed in the 1960s as states began requiring minimum auto insurance but set limits that often proved inadequate for serious accidents, creating a need for additional protection.

Common Misspellings

underinsured motorest coverageunder insured motorist coverageunderinsured motorist covergeunderinsurd motorist coverage

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