Underinsured insurance is a very wise investment in car insurance options. Also known as underinsured motorist coverage, and often paired with uninsured motorist coverage, it takes over where the at-fault party’s liability insurance leaves off.
If the person who is deemed responsible for the accident does not carry a high enough liability limit to pay for all your medical expenses, your own underinsured insurance will provide you with additional coverage up to the limit of your policy.
Now that you know the definition of underinsured insurance you can read on to learn even more or you can enter your zip code above for a free car insurance quote comparison!
Why Underinsured Insurance is Necessary
It is rather unfortunate that many people find themselves in a situation where they are in need of underinsured insurance. Quite a large number of drivers carry insurance liability coverage that is insufficient to cover the cost of a serious accident if they were at fault. A car accident where someone is killed often surpasses the limits of liability coverage for many drivers. Multiple injury victims from a single car accident are also likely to surpass liability limits. A serious injury that requires long term care, or even hospitalization followed by rehabilitation, can also easily exceed the liability limit of many policies.
Another unfortunate fact is that many people opt for the minimum amount of coverage that they must carry when it comes to car insurance, primarily because they are trying to save money by cutting corners on their coverage. Many of them incorrectly assume that the state requirements are sufficient. In fact, they are not. In all states there are minimum amounts of bodily injury and property damage liability limits that you must carry on your vehicle, unless you meet certain other financial requirements. These limits are astonishingly low when you consider the cost of healthcare. While adequate for fender benders; when you need coverage the most, following a serious accident, state minimum amounts of liability insurance are pitifully inadequate.
State minimum amounts of liability coverage range from a low of $10,000 per person and $20,000 per accident in the state of Florida to a high of $50,000 per person and $100,000 per accident in Wisconsin. Even at the higher levels, medical expenses can easily exceed them.
Different Treatment of Coverage Limits
As with many aspects of insurance, there are differing ways that underinsured insurance is treated by insurance companies in different states. In some places your limit on your underinsured insurance policy will be piggybacked onto the coverage that the at-fault driver had, giving you coverage equal to the sum of both for your medical expenses. In other states, underinsured coverage is treated quite differently and your coverage limit is reduced by the amount the at-fault driver carried. Therefore the maximum amount of coverage you would have for medical expenses would be equal to the limit you have invested in.
Buying Underinsured Motorist Insurance
Everyone who has car insurance should also carry underinsured insurance, as well as uninsured motorist insurance. These types of coverage will give you the protection you need from serious injury costs incurred at the hands of another. In fact, this type of coverage is mandatory in several states including Virginia, Wisconsin, North Carolina, Maine and Connecticut. It is also included automatically in many full coverage car insurance quotes.
In order to save money on car insurance coverage without sacrificing necessary coverage such as underinsured insurance and adequate liability coverage, it makes sense to shop around for the best price. Get as many quotes as possible and compare not only price, but also the types of coverage included in the quotes, the limits and the company itself. In addition to the policy details, it is important to check out the financial stability of the insurer and its customer service record. You can learn about the financial outlook for an insurer through one of the independent insurance ratings companies. You can investigate its customer service record through your state department of insurance or through an online search.
In order to make the job of shopping around for the best price as easy as possible, use an online quote tool. With these free tools, you only need to input your zip code to start and the tool will ask you what it needs to know. Answer questions honestly and thoroughly for the most accurate quotes possible. A policy issued based on incorrect information will be at risk for cancellation or claims denial.
Once the quote tool has your information, it submits it to a variety of insurers serving your area and before you know it, you have the quotes you need to make the necessary decision you must make regarding your car insurance purchase, including underinsured insurance. Get started now!
