When you buy “full coverage” for your car insurance, one type of coverage you get is called underinsured motorist coverage.
Underinsured motorist coverage is an important coverage to have available to you when you get into a serious car accident. Without underinsured motorist coverage, when you get involved in a serious car accident, your recovery will as a practical matter be limited to the amount of liability insurance that the at-fault driver has on their vehicle. The state minimum for liability insurance is $25,000 per person and $50,000 per accident, which really does not go very far when serious injuries are involved.
The way that underisnuured motorist coverage works is that it steps in and pays any damages you are due from a car accident and the amount of the at-fault driver’s insurance coverage up to your policy limits. That is pretty complicated, so here’s an example:
1. If the at fault driver has $25,000 in insurance coverage and you have $100,000 in underinsured motorist coverage and your damages are $70,000, then you would collect $25,000 from the at fault driver and then an additional $45,000 from your own insurer under your underinsured motorist coverage.
2. On the other hand, if your damages are $150,000, you would collect only an additional $75,000 because the underinsured coverage only makes up the difference up to your policy limits, which in this case are $100,000.
Underinsured motorist coverage cheap coverage to buy – the premiums are very low – but expensive to go without if there is a serious car accident,