Your day began on a high note with a brand-new convertible, a sunny sky, and a road trip to the beach with friends. But, in an instant, a careless driver rear-ended you, crumpling the back of your car and deploying the airbag. Fortunately, no one was hurt. After assessing the property damage and exchanging details with the other driver, you contacted your insurance company to file a claim, only to discover that the other driver lacked sufficient coverage.
Although the other driver was clearly at fault, this doesn’t necessarily mean you’ll go uncompensated. Your ability to receive compensation depends on whether your policy includes coverage for property damage to underinsured motorists. The following information will help you understand this type of coverage better.
How does Underinsured Motorist Property Damage Coverage work?
The terms “underinsured” and “uninsured” are often used interchangeably in the context of insurance coverage, and in many cases, they refer to the same thing, depending on the state or policy. However, in some states, underinsured motorist coverage is limited to medical expenses, lost wages, pain, and suffering, as well as other injury-related costs that aren’t covered by the at-fault driver’s policy. In these states, property damage that exceeds the amount of coverage provided by the at-fault driver’s policy is covered by a separate type of insurance called uninsured motorist property damage insurance (UMPD).
In certain states, such as California, you have the option to purchase either underinsured motorist bodily injury coverage or underinsured motorist property damage coverage, collectively known as UIM coverage. Over a dozen states, including Illinois, Kansas, and New York, mandate that drivers carry uninsured and/or underinsured motorist coverage, at the very least to cover bodily injuries. Additionally, some states like Texas and North Carolina require any uninsured motorist property damage policy to provide coverage for a minimum of $25,000 in damages.
As you can observe, the requirements and limits for this type of coverage vary significantly from one state to another.
The Ins and Outs of Underinsured Motorist Property Damage Coverage
It’s important to ensure that your uninsured or underinsured motorist coverage exceeds the at-fault driver’s policy limits. For instance, consider a scenario where your convertible sports car sustains $30,000 in damages. If the at-fault driver’s policy only covers up to $15,000, you’ll need an additional $15,000 to cover the remaining damages. However, if your underinsured motorist property damage coverage is also limited to $15,000, you won’t be able to claim on that policy, and you’ll only receive $15,000 from the other driver’s insurance company.
When selecting these additional coverage options, you determine the coverage limits, which may be influenced by state regulations that dictate minimum requirements. These limits are typically divided into two categories: maximum payout per individual and maximum payout per accident. Additionally, some states allow insurers to impose a deductible, which is the amount you must pay out of pocket before the insurer will begin covering claims.
Should You Invest in UIM Property Damage Coverage: A Decision-Making Guide
Having collision insurance, which covers vehicle damage regardless of fault, typically renders additional coverage for uninsured or underinsured motorists unnecessary. However, if you lack collision insurance, your liability coverage will only compensate for damage and injuries caused to others, leaving you uncompensated for property damage caused by an under- or uninsured motorist.
The value of your vehicle is another factor to consider. You’ll need to weigh the cost of this coverage against the value of your car and may determine that it’s not essential, especially if you’ve already decided that collision insurance isn’t worthwhile.
Consult with a Legal Expert About Your Auto Insurance Options
Choosing the appropriate car insurance policy and determining whether underinsured motorist property damage coverage is necessary can be a daunting task. Insurance, by its nature, involves uncertainty.
If you have questions, require guidance on this topic, or need assistance with filing a claim, consider consulting a nearby motor vehicle attorney for expert advice.
