Even if another driver has auto insurance, their policy may not provide enough coverage to pay for all the damage after a serious accident.
This is where Underinsured Motorist Coverage (UIM) can help. It may provide additional financial protection when the at fault driver’s liability insurance is not enough to cover your covered losses.
Understanding how this coverage works can help you decide whether it is worth adding to your auto insurance policy.
What Is Underinsured Motorist Coverage?
Underinsured Motorist Coverage (UIM) is an optional type of auto insurance in many states that may help pay for covered expenses if you are injured in an accident caused by a driver whose liability insurance limits are too low.
Instead of relying only on the other driver’s insurance, your own policy may help cover eligible costs, up to your policy limits.
The availability of UIM coverage depends on state laws and your insurance company.
How Does Underinsured Motorist Coverage Work?
Here is a simple example.
Imagine another driver causes an accident.
- Their liability insurance covers up to $50,000.
- Your covered medical expenses and other eligible losses total $90,000.
If your policy includes Underinsured Motorist Coverage, it may help pay some of the remaining covered costs after the other driver’s insurance has paid its limit.
The amount paid depends on your policy terms and coverage limits.
What Does Underinsured Motorist Coverage Usually Cover?
Coverage varies by policy and state, but it may help pay for:
- Medical expenses.
- Lost wages.
- Pain and suffering, where allowed by law.
- Certain other covered damages related to the accident.
Review your policy to understand exactly what is included.
What Does Underinsured Motorist Coverage Not Cover?
In many cases, UIM coverage does not pay for:
- Damage to your own vehicle, unless your policy includes the appropriate coverage.
- Intentional acts.
- Expenses that exceed your policy limits.
- Losses excluded by your insurance policy.
Always check your policy for specific exclusions.
Is Underinsured Motorist Coverage Required?
It depends on where you live.
Some states require insurance companies to offer Underinsured Motorist Coverage, while others make it optional.
The rules vary across the United States, so check the requirements in your state.
Underinsured Motorist Coverage vs Uninsured Motorist Coverage
Although they sound similar, these coverages are different.
Underinsured Motorist Coverage may apply when the at fault driver has insurance, but the policy limits are not enough.
Uninsured Motorist Coverage may apply when the at fault driver has no auto insurance at all.
Some insurance policies include both types of coverage.
Is Underinsured Motorist Coverage Worth It?
Many drivers choose this coverage because serious accidents can result in expenses that exceed another driver’s insurance limits.
It may provide additional financial protection and reduce your out of pocket costs after a covered accident.
Whether it is worth adding depends on your personal situation, your budget, and the options offered by your insurance company.
Frequently Asked Questions
Does Underinsured Motorist Coverage pay for vehicle repairs?
Not usually.
UIM coverage mainly applies to certain injury related expenses. Damage to your vehicle is generally handled under other parts of your auto insurance policy, depending on your coverage.
Can I use Underinsured Motorist Coverage if the other driver has insurance?
Yes.
That is exactly what this coverage is designed for. It may help when the other driver’s insurance is not enough to cover eligible losses.
Is Underinsured Motorist Coverage available in every state?
Not always.
Availability and requirements vary by state and insurance company.
Do I have to buy Underinsured Motorist Coverage?
Not in every state.
Some states require it, while others make it optional. Check your state’s insurance rules and your policy options.
Key Takeaways
Underinsured Motorist Coverage can provide valuable financial protection if you are injured by a driver whose liability insurance is not enough to cover your covered losses. While the exact rules vary by state and insurance company, this coverage may help pay eligible expenses after the at fault driver’s policy limits have been exhausted. Reviewing your auto insurance policy can help you decide whether Underinsured Motorist Coverage is right for you.