If another driver collides with you while you are out driving, you expect that the other motorist has insurance to pay for your damages. Unfortunately, not all drivers carry insurance, which means it is possible that you could get into an accident with somebody who cannot pay for your medical and property damages. This is why some drivers purchase underinsured/uninsured insurance.
Not everyone has underinsured/uninsured coverage, but it may be crucial if you end up with costly medical bills following an accident. According to Policy Genius, this kind of insurance can prevent you from having to pay for collision expenses out of your own pocket even if it is clear you were not at fault.
How uninsured coverage works
If you have an uninsured insurance policy, in the event an uninsured driver collides with you, the policy will pay for your damages. An underinsured insurance policy works in a similar fashion. A driver who hits you may have insurance but not enough to pay for your damages. In such a case, your underinsured coverage will make up the difference.
Underinsured/uninsured insurance involves two different kinds of coverage. Uninsured motorist bodily injury coverage will compensate you for medical costs pertaining to injuries sustained in an accident. Uninsured motorist property damage will pay for damages to your vehicle or another form of property. Keep in mind that not all insurers offer these two kinds of coverage.
Reasons to have coverage
People may have different reasons to buy underinsured/uninsured insurance. In some states, the law mandates that driver have this coverage. Additionally, people who finance or lease their vehicles may need uninsured coverage per the requirements of a financing or leasing outfit. Uninsured coverage can also compensate you if a driver hits you and drives away without providing any identification or insurance information.
Generally, people buy this kind of insurance to prevent from having to pay for their own expenses stemming from an accident. The Insurance Information Institute found that nearly 13% of motorists in the United States do not have insurance, so you cannot discount running into an uninsured/underinsured driver on the road.