Underinsured and Uninsured Auto Coverage


Underinsured coverage
Underinsured coverage refers to coverage available to an insured involved in an accident with a driver who has insufficient auto insurance coverage. Most statutes establish a minimum amount of coverage that an insured must purchase, while others set a maximum limit that an insured may purchase. This coverage applies if either (1) the insured's damages exceed the liability limits of the policy of the driver who was at fault, or (2) the insured's uninsured/underinsured motorist coverage limits exceed the liability limits of the policy of the driver who was at fault.

Underinsured motorist bodily injury coverage pays for an insured's medical expenses, lost wages, and other damages when he is injured in an accident caused by a driver who has insufficient auto insurance coverage. Underinsured motorist property damage coverage pays for damages to an insured's car in an accident caused by a driver who has insufficient auto insurance coverage. The insured will be paid the difference between the coverage limit that he selected and either the bodily injury coverage limit or the property damage coverage limit in the policy of the driver who was at fault. The amount covered is limited by the amount chosen by the insured when he buys the policy.

Uninsured coverage
Uninsured coverage refers to coverage available to an insured involved in an accident with a driver who was driving an uninsured vehicle. An uninsured vehicle is usually defined in the policy. It may be a vehicle for which the driver has not obtained the minimum amount of coverage, a vehicle whose insurer has become insolvent, a vehicle whose insurer has denied coverage, or a vehicle for which insurance proceeds are uncollectible. It may also cover damages caused by a hit-and-run driver who cannot be found. Many states require uninsured motorist coverage to be offered at a minimum amount, while some states impose maximum limits.

Uninsured motorist bodily injury coverage pays for an insured's medical expenses, lost wages, and other general damages when he is injured in an accident caused by a driver who was driving an uninsured vehicle. This coverage also pays for an insured's injuries sustained in a hit-and-run accident. Uninsured motorist property damage coverage pays for damages to an insured's car arising from an accident caused by a driver who was driving an uninsured vehicle. The amount covered is limited by the amount chosen by the insured when he buys the policy.

Uninsured/Underinsured motorist bodily injury coverage
In some states, both uninsured and underinsured motorist bodily injury provisions are bundled into a single coverage, which may be mandatory coverage to purchase.

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