Differences Between Uninsured and Underinsured Motorist Coverage

March 18, 2013

A lot of drivers who are looking at advanced options from their auto insurance representatives may have questions about uninsured and underinsured motorist coverage. Some drivers might see these two things as being “parts of the same piece,” when in fact they are two different kinds of coverage. Getting some basic information on what these policy features include can help drivers figure out how to use them to avoid liability on the road.

Uninsured Drivers Coverage: What It Covers

Uninsured motorist coverage for auto insurance covers situations where the policyholder has a collision with a driver who does not have any auto insurance at all. Classically, these kinds of situations would have been resolved through the courts, but with medical costs in America being so high, and vehicle damage costs being similarly unaffordable to many, public officials and others recognize that there is a low chance of an uninsured driver being able to pay for damages on their own. That's why many states have come to mandate uninsured motorist coverage as an addition to an auto insurance premium. Even in states that don't require this, drivers should think about adding uninsured drivers coverage or “UM” to a policy.

Underinsured Drivers Coverage: What It Covers

Underinsured motorist coverage is for when an at-fault driver does have some auto insurance, but not enough to cover the costs of the accident. This is becoming an ever more common issue, because the basic liability insurance required by many states is not nearly enough to cover the damage done by most collisions. Again, skyrocketing costs of health care, along with the high costs of fixing vehicle body damage, have contributed to a situation where it makes a lot of sense to have underinsured motorist coverage or “UIM.”

Additionally, UIM will help cover medical costs and lost wages for those who have been in an accident that was the fault of another driver. UIM will often pick up costs that health insurance or the at fault driver's auto insurance won't pay. Many think of it as “filling in the gap” in a policy claim.

For the Road

A major difference between uninsured motorist coverage and underinsured motorist coverage is that most states require drivers to take out uninsured motorist coverage by law. Public officials in the states reason that having mandatory uninsured motorist coverage will prevent a lot of traffic claims cases from clogging the courts and taking an inordinate amount of time to resolve.

On the other hand, underinsured motorist coverage is often just an option, something that many drivers overlook when crafting policies to cover all of their potential liability.

Drivers looking at creating the best policy should carefully consider whether to stay with the mandated uninsured motorist car insurance coverage or to choose an UM/UIM package.