Underinsured Motorist Coverage (UIM) is a type of vehicle insurance designed to protect drivers when they are involved in an incident with another motorist who has insufficient insurance coverage to cover the total damage or bodily injuries. This coverage is crucial for covering the gap between the actual loss incurred and the amount covered by the at-fault driver’s insurance policy.
How It Works
UIM coverage activates when the policyholder is involved in an accident where the other driver is at fault and that driver’s insurance is not adequate to cover the damages sustained. The UIM will compensate the policyholder up to the limits of their own UIM policy, but only after the at-fault motorist’s insurance limits have been exhausted.
Important Note
Note: It’s important to choose UIM limits that correspond adequately to potential risks and losses. Each state might have different regulations governing how much coverage is required, if it is required at all. For specifics on local laws and regulations governing UIM, you might want to consult state government insurance departments or a legal advisor familiar with state-specific insurance laws.
Why It’s Needed
In many cases, coverage options (like UIM) are an essential part of the automobile insurance policy that acknowledges the reality of rising medical costs and repair expenses. They ensure that you’re protected even if other drivers on the road may not have adequate coverage.
Additionally, without UIM, individuals might find themselves unable to cover medical bills, repair costs, and other expenses resulting from accidents with underinsured motorists, leading to significant financial strife. Having robust UIM coverage helps mitigate these risks substantially.
