If you drive a car, then you probably have seen a reference in your car insurance to uninsured and underinsured motorist coverage. Maybe your policy statement indicates that a portion of your car insurance premium goes to provide you with uninsured and underinsured motorist coverage. Maybe your insurance agent has told you that you should increase the amounts of uninsured and/or underinsured coverage that you have purchased. Understanding the protection that each coverage gives you and the differences between the two will allow you to choose and pay for the insurance which best protects you and your family in the event that a serious car accident occurs.
Understanding the Difference between Uninsured and Underinsured Motorist Coverage.
Uninsured motorist coverage protects drivers from individuals who do not have any insurance on their cars to pay claims for property damage and bodily injuries. It also covers hit-and-run drivers and "phantom drivers," who cause an accident but do not stop because they do not know about their involvement. Underinsured motorist coverage pays the difference when the at-fault driver's insurance is insufficient to compensate the accident victim for the injuries suffered in an accident. In some states, one or both of the coverage is mandatory in order to drive a car. In other states, uninsured and underinsured coverage is an option. Still other states include the notion of insufficient or underinsurance in the definition of an uninsured driver.
Required Automobile Insurance
To understand the distinctions between uninsured and underinsured motorist coverage, you must first be generally familiar with the subject of car insurance as a whole. Almost every state in the country requires an individual operating a motor vehicle to obtain automobile insurance. Most states allow the driver to chose whether they want insurance to cover their own car in the case of a collision. On the other hand, most states require that a car driven on the road have a minimum amount of insurance to cover liability for property damage and bodily injury caused to other vehicles and drivers. Some states set minimum requirements for such liability coverage.
Whether the state mandates the amount or the driver purchasing the vehicle chooses an amount, if an accident occurs, the insurance on the at-fault car only covers damages from the accident up to the specific amount of the insurance purchased. The maximum amount that the car insurance company will pay to an individual or to a number of individuals injured in a single accident is called the policy limits or the limits of liability.
Amount of Accident Insurance Determined by Insurance Policy
If you are involved in a hit and run accident or an accident with someone who does not have insurance, any property damage or bodily injury claims you have would be covered by your own uninsured motorist coverage. The amount of insurance available for such claims is determined by your pre-existing contract of insurance. If you have the state-dictated minimum, then that is the policy limits for your uninsured motorist claim. If you have purchased additional coverage, then that amount of protection is available to you. You know best how much insurance you and your family would need in the event of a serious accident. Purchasing that amount in uninsured motorist coverage prevents an uninsured driver from depriving you of adequate insurance coverage.
Similarly, purchasing adequate underinsured motorist coverage lets you choose the amount of insurance that will cover you in the case of a serious accident. Underinsured motorist coverage pays the difference between the damages you have and the insurance available on the at-fault vehicle.
The Amount of Underinsured Motorist Coverage Varies
States differ in how they determine the amount of underinsured motorist coverage available when the damages from an accident exceed the limits of liability of the at-fault driver's policy. There are three main variations nationwide. Some states use the difference between the limits of the at-fault driver and your underinsured motorist coverage. That means you can only recover damages for injuries in excess of the at-faults driver's policy if the amount of your underinsured motorist coverage exceeds the at-fault driver's policy limits. For example, assume you have a serious car accident and have $100,000 in bodily injury and property damage claims and the at-fault driver has a $30,000 policy limits. If you have $30,000 of underinsured motorist coverage you will receive only $30,000 in insurance payments because there is no difference between your policy and the at-fault driver's policy limits.
The Amount that Can be Recovered Determined by State Law
Other states allow you to use your underinsured motorist coverage if the amount the at-fault driver actually pays you is less then the amount of your underinsured motorist coverage. Again, assume you have $100,000 in damages and that the at-fault driver has a $30,000 policy limit. If you had $50,000 dollars in underinsured motorist coverage in a state that follows this system your total compensation would be $50,000. You would receive the $30,000 from the at-fault driver and $20,000 from your underinsured motorist coverage, or the difference between the amount paid by the at-fault driver and your own underinsured motorist policy. Again, in these states, your protection is limited to the amount of underinsured motorist coverage you have selected.
Some states allow your underinsured motorist coverage to be added on top of the at-fault driver's policy limits. That means your entire underinsured motorist coverage is available to you to the extent that your damages exceed the at-fault driver's policy limits. In these states, if you had $100,000 damages, a driver with $30,000 policy limits and a $50,000 underinsured motorist policy you would receive $80,000 because your underinsured motorist coverage is added to the at-fault driver's policy limits.
You may wish to contact your insurance agent or an attorney who knows the insurance laws in your state to determine which uninsured and underinsured laws apply to you. That way you can assess the risks associated with an accident involving an uninsured or underinsured motorist in your state and purchase the right amount of insurance to adequately protect your family.
Uninsured and Underinsured Motorist Coverage in Massachusetts
Most of what has already been discussed holds true for Massachusetts Uninsured and Underinsured benefits. The coverage is compulsory in Massachusetts, with minimum limits currently set at $20,000 per person and $40,000 per accident (commonly referred to as "20/40"). Uninsured Motorist Coverage is compulsory and would cover you in the event that a car with either no insurance and/or canceled insurance struck your vehicle, causing you and/or your vehicle damage or injury.
Underinsured motorist coverage occurs when a vehicle that strikes and causes you injury has minimal insurance as compared to your injuries and/or damages. If your injuries are severe enough to warrant your collecting the whole amount available to you under the responsible party's policy, i.e., $20,000 per person, then you could turn to your own underinsurance for excess damages, assuming your policy has more than the policy of the responsible party. For example, Car A strikes Car B, causing Car B's driver to have extensive and serious injuries. Car A has $25,000 in liability available, which is paid to Car B. Car B is carrying underinsured motorist benefits in the amount of $60,000. Car B would subtract the amount received from Car A and have the balance available for injury payment.$60,000 - $25,000 = $35,000.
You may not collect uninsured or underinsured motorist benefits from more than one policy, nor may you combine household policies. This is called "stacking" and you may not do so in Massachusetts. You may turn solely to one policy for coverages.
Conclusion
Understanding the difference between uninsured and underinsured motorist coverage lets you prevent one of the worst consequences of a serious car accident: insufficient insurance to compensate you for your injuries. Working with an attorney who understands your state's laws on uninsured and underinsured motorist coverage will help you determine your own needs and the limits of liability you need to protect you and your family.