What is Underinsured Motorists Coverage?
What is Underinsured Motorists coverage? Why do I need it?
Underinsured Motorist coverage is an endorsement to your car insurance policy that provides more complete insurance protection. Underinsured Motorists (UIM) coverage applies when a negligent driver has liability insurance, but the limits on their policy are lower than the actual cost of your bodily injury.
For example, John Doe is involved in a car accident with an underinsured driver. The other driver carries his state mandated minimum liability limits of $25,000/$50,000 for bodily injury. John suffer sever injuries and his medical expenses will exceed $100,000, not to mention pain and suffering damages.
The underinsured driver's car insurance company will pay out the full limit of his policy, which is $25,000 per person. Had their been multiple injured parties, his insurance would have paid $25,000 per person, but not more than $50,000 total per accident.
With John's medical expenses far exceeding the underinsured driver's liability limits, his own UIM coverage would pay up to his policy's limit. So if he carried a UIM limit of $250,000, he would receive $25,000 from the underinsured party and his own car insurance company would pay the remaining amount of his expenses up to the $250,000 limit.
UIM coverage is similar to UM, or uninsured motorists coverage, but they are separate and you cannot collect under both coverages.
In the example described above, John would probably have enough UIM coverage to meet his expenses. UIM coverage is often viewed as insurance for "the other guy", but in reality, it provides vital protection for YOU in the event you are injured by someone who carries too low of liability limits.
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