Most people look forward to a trip to their insurance agent’s office about as much as they long to visit their dentist. Insurance is complicated and the forms are intimidating. In most states, automobile insurance is required by law, so thinking about insurance can’t be avoided. It is dangerously easy to see insurance dollars as pennies you can pinch. But if you are ever in a serious accident caused by another driver’s negligence then you’re at the mercy of their insurance coverage — unless you’re smart enough to carry reasonable underinsured insurance coverage.
Automobile insurance is required to protect the other driver against your negligence. Liability insurance does that and is generally bought on a scale. For example, a 25/50/25 liability policy covers a driver you injure for $25,000 per driver, $50,000 per accident for personal injuries and $25,000 for property damages. The amount of that coverage is set by law, which requires you to carry certain minimum coverage. The more liability coverage you carry, the less of a judgment in a lawsuit you’ll have to pay out of your own pocket. But if your pockets are empty, it is easy to find yourself looking for bargains when you’re buying a policy.
You can not decline uninsured coverage. If a driver hits you and injures you and he is not insured, then your uninsured coverage is your source of recovery. In most states the law requires uninsured coverage in the same amount as your liability coverage. That way, drivers who obey the law and carry insurance are never forced to pay for the negligence of drivers who are not as careful.
There is a type of coverage that is voluntary and you could decline, but those are the pennies you should not pinch. Underinsured motorist coverage is the part of your policy that will provide you extra coverage should you ever be seriously hurt in a car wreck. If the other driver carries only minimum limits, an injured driver may find that their medical bills alone amount to more than the other driver’s policy carries. In that case, there would be no coverage to pay for your pain and suffering or lost wages unless you provide it from your own policy. Yes, your lawyer could seek damages from the other driver’s assets. But, will you gamble on being creamed by a rich man careless enough to expose his wealth to a personal injury judgment? The odds on that are longer than those favoring the house at a casino.
You can buy underinsured coverage in at least the amount of liability insurance you carry and some insurance companies will allow you to buy more. If you are allowed to buy more and you can afford it, splurge on that part of your policy. You’re protecting yourself, your spouse and your children, so be generous with that part of the budget.
When you take out auto insurance, you will be offered underinsured coverage which is not mandatory but should never be rejected. It gives you, your spouse and your children extra coverage that will pay for personal injuries suffered from a negligent driver with minimum limits insurance. In today’s economy, minimum limits are more the norm than the exception. Underinsured motorist coverage gives you the security of knowing that you and your family are protected.