When Is Uninsured Motorist Coverage Necessary?

March 13, 2012

Being injured in an accident caused by an uninsured or hit-and-run driver can leave you holding the bag. Uninsured motorist coverage remedies this.

Plainly speaking, uninsured motorist coverage is always necessary to protect you from an incident where an uninsured party crashes into your vehicle. In these situations, you have to use your own insurer as the "default" payer. In some areas of the U.S., a startling number of drivers don't comply with the requirements for coverage that would provide for paying claims.

Uninsured motorist insurance is a type coverage that protects you in the event of an accident involving an at-fault driver who doesn't have auto insurance, is underinsured, or if you have been involved in a hit-and-run accident (whether you are a pedestrian or a driver).

Financial experts agree that it is almost always best to get the maximum amount of uninsured or underinsured motorist insurance coverage that a household can afford, to pay for medical expenses, lost wages, pain and suffering, and all else in the event of a collision with the uninsured or underinsured. Here are some of the times when uninsured or underinsured motorist insurance coverage is most necessary.

High Risk Areas
In some places, as mentioned, the number of uninsured or underinsured drivers on the road is extraordinarily high. For example, official estimates in some parts of Los Angeles and surrounding counties assess that as high as 90 percent of drivers do not carry auto insurance, or carry insufficient minimum liability. A driver in any high risk area is more likely to get into an uninsured or underinsured motorist insurance situation, and can use a good policy to avoid a lot of liability.

Drivers without Major Medical Insurance
Another set of startling statistics comes from government agencies looking into how many Americans have good major medical health insurance. Millions of Americans do not have sufficient health insurance. Uninsured or underinsured motorist insurance policies often include insurance components for major medical costs. That means with an uninsured or underinsured motorist insurance policy you will go to the hospital on the tab of your insurer. Without this kind of policy, you may end up paying out of pocket.

Minimum State Insurance Requirements
You can also look at the amounts of insurance that are required by their state. A huge number of drivers buy the minimum amount of auto liability insurance mandated by the state, and in many cases, that's not enough to cover vehicle damage costs and everything else associated with a claim. Look at the state requirements for a better understanding of why a household may need additional safeguards written into their policy to deal with uninsured or underinsured drivers.

Mandatory or Optional Uninsured Motorist Insurance Coverage by State
Some states require this kind of uninsured or underinsured motorist insurance to assure that unpaid claims do not spiral out of control, but in some states, this kind of coverage is still optional. It's important for drivers in those "optional states" to really think about why uninsured or underinsured motorist insurance coverage is a good idea, and not go with the less expensive choice when shopping for auto insurance.

The Benefits of Uninsured Motorist Insurance

Uninsured driver coverage is important because a driver who was not at fault can use their own insurer to pay the claim as a "default payer." Here are some additional benefits to having uninsured motorist coverage for potential liability situations:

  • Pain and suffering. With full tort uninsured or underinsured motorist coverage, a driver who is not at fault can claim full compensation, including amounts for pain and suffering, from their insurer in the event of a crash.
  • Better financing. Although it may not be common, some lenders recommend or require uninsured driver coverage as part of the insurance needed to protect an investment in a vehicle that may have a lien on it during a loan term.
  • Peace of mind. Because, as mentioned, uninsured driver coverage provides for specific events, drivers who carry this can rest assured that they will have a party to foot the bill for claims where an irresponsible driver is at fault and they are operating "under the radar" without auto insurance. Some states have less stringent rules and penalties for going without auto insurance than others, but in all cases, lack of insurance coverage is a real problem for collisions that exceed a negligible value.

The Drawbacks of Uninsured Motorist Insurance

Just because this kind of insurance is in place does not mean everything will work smoothly. Here are some potential problems in an uninsured motorist insurance situation.

  • Limited tort. In some states, limited tort insurance is an option. But limited tort can hurt drivers who have to litigate a crash that was not their fault. Under limited tort, a beneficiary does not get compensated for pain and suffering or "emotional" damages. These payments can sometimes be necessary to provide for consequences of a crash.
  • Lost wages and medical limitations. Again, uninsured motorist insurance that does not include specific coverage components for lost wages and other financial impact can leave a hapless driver high and dry when dealing with their own insurer as a default payer.
  • Premium hikes. Another potential problem is a backlash from the insurer trying to recover some of the costs of paying a claim under uninsured motorist insurance coverage. In these cases, the insurer sometimes tries to use premiums as a tool to recover money from the driver who filed the claim. This just puts the burden back on the driver, and this kind of premium situation should be expressly written out of an uninsured motorist insurance contract.
  • Insufficient policy amounts. Sometimes, basic liability insurance just doesn't stretch far enough. In some cases, it may be that the amounts included in a policy have not been adjusted for "inflation" (not the general market inflation, but specifically, the inflation of health care costs). Financial experts often counsel households to get as much auto insurance coverage as they can afford to make sure that when the claims pay out, they cover all of the expenses for body work, extensive refurbishing, travel costs and everything else.
  • Vague contracts. Many times, the lack of a few clear rules on uninsured motorist insurance can make the process much more difficult. With uninsured motorist insurance, the driver taking out the policy needs to know that the insurer will pay when the at-fault driver just doesn't have any insurance and has no assets to pay the claim. The more concrete the uninsured motorist insurance contract, the more a driver can rest easy about what may happen on the road.

How to Get Uninsured Motorist Insurance Coverage

If you are loyal to your current insurance, call them up or schedule an appointment to meet with a representative. They can help you in a one on one environment. They will be able to tell you the increase in amount and the best coverage for you instead of you having to do the research online. Review the coverage features including the limitations, the insurance rates and the cost of the coverage. Compare this cost with other insurance companies and try to find out what other companies have to offer. Overall, in today's climate, you must have uninsured motorist coverage.

Get Advice
Seek help from your friends or relatives who have had experience buying uninsured or underinsured motorist coverage. Based on their advice, contact the auto insurance agents or brokers whom they have referred to, to find out details about the uninsured motorist coverage included in the insurance policies offered by them.

Getting Insurance Online
Go online and research rates for the coverage. The average rate is around 10 percent of what your primary policy's premium is. It is not a small price, however it is highly worth it with raising accident rates and a rising number of uninsured motorists out there on the road. The best place to look for uninsured motorist collision insurance would be to go to the big insurance company's websites like Allstate.com or Statefarm.com.

Once you get to the website, you enter in your information pertaining to your location, vehicle and other information requested. This helps them come up with the rates of the different policies they offer you. From there, the next step will be to pick a policy. There will be a bevy of different options available. Each option covers different things such as bodily injury, medical expenses, comprehensive insurance, underinsured motorist and others. The price for each of these will be displayed. Do this on a few different websites. Cross check the coverage options and pricing from the different companies, which will enable you to find the most coverage for the lowest price.