If you are looking at whether or not to add underinsured motorist coverage to an auto policy, there are some things you want to carefully consider. Different states have different systems to compensate those who have been injured because of another individual’s bad driving. Knowing more about how to use this kind of underinsured motorist coverage (UIM) will help households make good decisions to protect themselves in the event of a crash. Here are some of the basic advantages and disadvantages of getting this kind of insurance into your policy.
Compliance – More than a few states actually require underinsured motorist coverage to assure that those injured in accidents get compensated. If this is the case, you want to pay specific attention to how much underinsured motorist coverage you need to be legally on the road in your home state.
Benefit – In so many cases, underinsured motorist coverage is your best chance at getting the full compensation for your injuries, medical bills, lost wages, and pain and suffering. Many unfortunate drivers have realized that if an at fault driver has no assets, they are unable to recover any or all of their costs. With underinsured motorist coverage, you’re not seeking compensation from another cash-strapped household, but from a large pool of capital that will pay out according to the terms of the agreement.
Expense – Many of those who are signing up for an auto insurance policy start seeing red when they realize how many charges are tacked onto their basic liability coverage. If you select collision and comprehensive insurance options, your rates are even higher. It may seem unfair that your policy needs to include even more coverage (and corresponding increases in premiums) for covering for other people’s mistakes. However, what those irritated by the costs of UIM coverage should realize is that if you are not at fault in an accident, underinsured motorist coverage will pay off for you. In the end, it’s just another simple case of paying more in exchange for more security on the road and a greater chance at a real claim payout.
Vague Terms – Some of the less scrupulous auto insurers may offer underinsured motorist coverage that doesn’t really live up to its name. The specific coverage that you purchase is no good if it will not pay off at claim time. Some companies will deny claims based on lack of documentation, vague clauses of a policy agreement, or just because of a range of so-called clerical errors. That’s why the individual policyholder has to be aggressive in holding the insurer to the terms of the agreement, providing correct documentation, and pursuing a claim appeal. This is one reason why some households may hate to add on additional insurance that they think may not be effective in the event of a claim.
The above are a few of the critical factors in whether or not drivers and households decide to purchase underinsured motorist coverage. A lot of this depends on what your state’s insurance system is: talk to your insurance representative up front and make sure you are effectively covered against an accident caused by an underinsured driver.