What’s the Difference Between Uninsured and Underinsured Motorist Coverage?
Even though all drivers are legally required to carry auto insurance, unfortunately, there are too many drivers on the road who are either driving without insurance or driving with minimal insurance coverage. AAA of Michigan estimates about 21% of Michigan drivers are driving without insurance. But what can you do to protect yourself if you’re involved in a car accident with these uninsured or underinsured drivers?
The best way to protect yourself from uninsured or underinsured drivers is by purchasing uninsured or underinsured motorist coverage through your auto insurance company. Fortunately, this coverage is usually very inexpensive to add on to your insurance plan.
In the state of Michigan, all drivers are required to have auto insurance that has the following types of coverage: personal injury protection (PIP) to cover medical expenses, property injury insurance (PPI) to provide up to $1 million of coverage for damage your car causes to property belonging to another person, and coverage for residual bodily injury and property damage liability (BI/PD) to cover defense costs if you are sued by another driver. 22 states and Washington D.C. require drivers to purchase uninsured and/or underinsured motorist insurance coverage, but Michigan is not one of those states. However, it can be purchased optionally through most auto insurance providers.
If you choose to purchase uninsured motorist coverage, it would protect you by paying for the expenses the other driver’s insurance would have covered had they been insured. Uninsured motorist coverage will also protect you if you’re in a hit-and-run accident with another driver who leaves the scene of the accident before you’re able to get the adequate information from the driver.
Uninsured motorist coverage generally covers the policyholder and their family members and other passengers who aren’t listed on the insurance policy.
With underinsured motorist coverage, your auto insurance company covers the difference between what the other driver’s insurance covers and what your damages are. So, for example, if you were in an accident with another driver who only has the minimum insurance required by the state of $20,000 that resulted in $30,000 worth of medical expenses, your auto insurance company would cover the $10,000 gap.
Uninsured and underinsured motorist coverage is sold in varying degrees of coverage. The most common level of coverage is 20/40, which limits coverage to $20,000 per person and $40,000 per accident, no matter how many people were injured during the accident.
With both uninsured and underinsured motorist coverage, it covers medical expenses, lost wages, and pain and suffering. In most cases, neither one generally covers damage to your vehicle or other property. If you’re interested in having insurance coverage that would cover damage to your car or other property, some insurance companies offer additional uninsured motorist property damage (UIPD) coverage. This type of coverage is purchased separately from uninsured motorist coverage, but isn’t available everywhere.