Importance of understanding the basics of uninsured and underinsured coverage


Uninsured or underinsured coverage is very essential as it deals with expenses related to damage to the vehicle as well as medical expenses incurred following the accident caused with a vehicle whose driver is not insured (uninsured) or is less insured (underinsured). According to a number of surveys that have been conducted in the past, it has suggested that there are a number of underinsured or uninsured motorists on the road and the risk of not having adequate coverage could put the victim as well as the party at fault into a huge financial crisis.

Accidents happen all the time and since it is so unpredictable it is important to have the right amount of coverage. The roads and highways are filled with a huge number of uninsured or underinsured motorists and hence the losses could be really high if you are not adequately insured. Sometimes, the regular coverage you might have may not be sufficient to cover for the losses in the event of being involved in an accident. In order to deal with such situations, it is important to purchase the underinsured or uninsured coverage.

There are two sub categories under underinsured or uninsured coverage. This is known as the ‘personal injury protection’ or PIP, bodily injury coverage, and property damage coverage. Bodily injury coverage will take care of the medical costs related to any of the injured passengers in the car or the owner of the car who may be uninsured. PIP and property damage coverage will pay for damages caused by the uninsured or underinsured drivers to the victims who were not ‘at fault.’ Hence, the underinsured or uninsured coverage will offer protection to the injured persons in case the party ‘at fault’ has no means to provide for compensation.

Most people fail to understand the relevance of having the uninsured or underinsured coverage. A vast majority of people feel that it is sufficient to have just the minimum amount of coverage that is prescribed by the state. This leads to a lot of problems when the most unthinkable things happen. There have been numerous instances where people have only purchased the mandatory insurance, but have suffered severe financial losses after being hit by an uninsured driver. In case of hit-and-run accidents, you cannot sue anyone for the losses that you might incur. Under such situations, underinsured or uninsured coverage could be of a great help to the innocent victims.

Adding the uninsured or underinsured coverage to your existing policy will not bring about any drastic changes to the existing premiums and there will be a marginal difference in cost. However, the coverage you get for this small additional cost is truly beneficial. With this coverage in hand, you will be well equipped even in the case of any untoward incident.

All these situations can arise due to the presence of such a huge number of uninsured or underinsured drivers. Under such situations, where the ‘at fault’ driver does not have the means to compensate, this coverage can prove to be highly beneficial.