Encounters of the Uninsured or Underinsured Motorist Kind
Does your current car insurance cover these collisions?
One of every eight drivers are uninsured, which is why Mercury recommends that you check your auto insurance policy for “Uninsured/Underinsured Motorist” coverage. Uninsured motorists do not have auto insurance for the vehicles they are driving, which is against the law in every state except New Hampshire. Underinsured motorists have liability coverage, but their limits are less than the dollar amount it would take to pay for bodily injury that result from an accident. In some states underinsured property damage is also available, so be sure to check with your agent.
So what happens if you’re in an accident with an uninsured or underinsured negligent driver? Auto insurance policies specifically ask if you would like uninsured motorist protection. Typically, coverage is segmented into two categories — uninsured motorist bodily injury (seen on the policy as “UMBI,” “UM” or “U”) and uninsured motorist property damage (displayed on the policy as UMPD). Underinsured motorist bodily injury and property damage is available in some states, so be sure to check with your agent.
- Uninsured motorist bodily injury. Pays for reasonable medical expenses, pain and suffering and loss of earnings for injuries to the driver and passengers that result from the accident.
- Uninsured motorist property damage. Pays for repairs to your car when the loss is caused by an uninsured motorist. In many cases, uninsured motorist property damage has a limit, so purchasing collision coverage ensures your car is fully repaired or replaced due to serious damage.
- Collision deductible waiver. When you purchase uninsured motorist property damage in conjunction with collision coverage, your uninsured motorist property damage coverage is referred to as collision deductible waiver and displayed on your policy as “CDW”. Collision coverage will pay for the damage to your vehicle (less the amount of your deductible), and when the loss is caused by an uninsured motorist, your collision deductible waiver coverage will reimburse or waive the deductible payment.
- Underinsured motorist protection. If the other driver does have insurance, but with coverage limits less than the damage to your car, you may have to rely on your collision coverage with collision deductible waiver or your uninsured motorist property damage coverage to pay the deductible or remaining balance of vehicle/property damage.
It is important to know that uninsured coverage may not include hit-and-run accidents. For uninsured/underinsured motorist coverage to apply, insurance companies usually need to verify the identity of the driver involved (vehicle license plate) to determine whether they’re uninsured or underinsured. Without this information, only collision coverage would guarantee the policyholder’s vehicle would be repaired and the insured would still be responsible to pay the associated deductible.
How much auto insurance coverage do you need for uninsured or underinsured encounters? Mercury recommends that uninsured and underinsured coverage match the policy’s current bodily injury liability limits and deductible.
¹One in seven drivers is uninsured according to the Insurance Research Council (IRC).