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What Is Underinsured Motorist Coverage?

hands with a cell phone taking a picture of an underinsured motorist car accident

When another driver causes an accident, you expect his or her insurance to pay for your damages. Sometimes, though, drivers don’t have enough insurance to cover the damages. Fortunately, that doesn’t mean you have to pay out of pocket. You can get underinsured motorist coverage to pick up the bill when this happens. Learn more about underinsured motorist coverage to see why you should add this to your policy.

Underinsured vs. Uninsured Motorist Coverage

First, you need to understand the difference between underinsured and uninsured motorist coverage. Uninsured coverage covers your bodily injury and property damage costs if you’re in an accident with someone who does not have insurance. 

Underinsured motorist insurance covers your bodily injury and property damage costs when the other driver has insurance, but it’s not enough to pay the damages. The other driver’s insurance pays the policy limits, and then your coverage handles the rest. 

What is Underinsurance? 

Each state has laws regarding the minimum liability coverage amounts. When drivers meet the minimum requirements, they can legally drive. However, minimum liability coverage often isn’t enough to pay for the medical bills and property damage after an accident. When the driver’s insurance policy limits are too low to pay for the damages, they are underinsured.

This typically happens when someone suffers severe injuries, misses work for an extended period, or has extensive property damage. 

How Underinsured Motorist Coverage Works

an emergency cone in front of a underinsured motorist car accident

Underinsured motorist coverage is relatively straightforward. To understand it, look at an underinsured example. 

Imagine you’re driving down the road and following all the rules when a Toyota Camry comes out of nowhere and sideswipes you. You suffer a broken arm and leg in the accident and need surgery. The at-fault driver has insurance, but the limits are too low to cover your medical bills. Your uninsured motorist coverage would pay your bills up to the policy’s limits. Then, the insurance company would sue the other party to recover the damages.

Your policy will also include underinsured motorist property damage coverage. It works the same way as bodily injury coverage. It will cover your vehicle if you’re hit by someone who is underinsured.

Health Insurance and Underinsured Motorist Coverage

Do you really need uninsured motorist coverage if you have health insurance? That’s a common question that people ask, and the answer is “yes.” More people file for bankruptcy due to medical issues and healthcare bills than any other reason. Often, they have health insurance, but it’s inadequate, leaving them with expensive bills. Without underinsured motorist coverage, you could be in the same boat. You could end up swimming in debt that you cannot pay and eventually have to file for bankruptcy.

Make Sure You Have the Coverage You Need

The right insurance coverage protects you when you are on the road. If you don’t have underinsured coverage, reach out to an insurance agent for a quote. You can then add the coverage to your existing plan, and you won’t have to worry if you’re in an accident with someone who doesn’t have adequate coverage. 

If you are getting ready to hit the road again, make sure you have the car insurance coverage you need. Freeway can help you save up to $839* on your policy, get a free car insurance quote online, over the phone, or at one of our offices near you.

*Based on a Q1 2020 study of Freeway Insurance customers who reported saving when they switched.

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