Answer:

Uninsured motorist coverage will usually reimburse you and anyone in your vehicle for any bodily injury and medical expense or death from an auto accident caused by:

1. a driver with no insurance

2. a hit-and-run driver

3. a driver of a stolen car

It does not cover property damage.

Underinsured coverage provides bodily injury coverage when the negligent driver has some insurance, but it is insufficient to cover your bills. Underinsured motorist coverage pays the balance -- up to the limit on your policy.

A lot of drivers who are looking at advanced options from their auto insurance representatives may have questions about uninsured and underinsured motorist coverage. Some drivers might see these two things as being “parts of the same piece,” when in fact they are two different kinds of coverage. Getting some basic information on what these policy features include can help drivers figure out how to use them to avoid liability on the road.

A major difference between uninsured motorist coverage and underinsured motorist coverage is that most states require drivers to take out uninsured motorist coverage by law. Public officials in the states reason that having mandatory uninsured motorist coverage will prevent a lot of traffic claims cases from clogging the courts and taking an inordinate amount of time to resolve.

On the other hand, underinsured motorist coverage is often just an option, something that many drivers overlook when crafting policies to cover all of their potential liability.

Uninsured Motorist

When a driver is looking for comprehensive, solid insurance that will alleviate financial difficulties in the event of a crash or claim, uninsured motorist insurance coverage can be an important part of the equation. Drivers need this kind of uninsured or underinsured motorist coverage in case they get into a collision with another driver who does not carry their own auto insurance policy.

Because the at-fault driver's policy generally pays for a claim, in a situation where an uninsured driver is at fault, the claim goes to the insured driver's insurer to be paid. That's why uninsured driver coverage is so important, because a driver who was not at fault can use their own insurer to pay the claim as a "default payer."

Ideally, regulations would make driving without insurance a very rare occurrence, but due to some significant elements of the American experience, uninsured drivers aren't going away any time soon. Uninsured or underinsured motorist coverage makes sure these situations are provided for to help responsible drivers minimize their risk on the road.

Plainly speaking, uninsured motorist insurance is always necessary to protect a driver from an incident where an uninsured party crashes into their vehicle. In these situations, the driver (who was not at fault) has to use their own insurer as the "default" payer. In some areas of the U.S., a startling number of drivers just don't comply with the requirements for coverage that would provide for paying claims.

Financial experts agree that it is almost always best to get the maximum amount of uninsured or underinsured motorist insurance coverage that a household can afford, to pay for medical expenses, lost wages, pain and suffering, and all else in the event of a collision with the uninsured or underinsured. But some cases are especially right for a high amount of uninsured or underinsured motorist insurance coverage.

What It Covers Uninsured Drivers Coverage?

Uninsured motorist coverage for auto insurance covers situations where the policyholder has a collision with a driver who does not have any auto insurance at all. Classically, these kinds of situations would have been resolved through the courts, but with medical costs in America being so high, and vehicle damage costs being similarly unaffordable to many, public officials and others recognize that there is a low chance of an uninsured driver being able to pay for damages on their own. That's why many states have come to mandate uninsured motorist coverage as an addition to an auto insurance premium. Even in states that don't require this, drivers should think about adding uninsured drivers coverage or “UM” to a policy.

Underinsured Motorist

Underinsured motorist coverage (UIM) protects you, in the event of an accident, from drivers who carry just enough liability insurance to meet the state's legal requirements but not enough to compensate for your damages.

If you're unsure whether your state mandates UIM, call your local insurance agent or your state's Department of Insurance. If it is an option, you should strongly consider UIM coverage if you currently carry a limited health insurance plan. Those who are covered under this policy include: the policy holder, authorized drivers, passengers.

You can purchase UIM from any reputable insurance carrier. But before buying, especially if it's an option, be sure to compare quotes from a variety of carriers. You'll find comparative shopping also has its benefits in the insurance world. Don't, however, let cost be your only criteria. Be sure the policy you're checking into provides adequate protection.

Fortunately, the cost of UIM is not prohibitive. It generally costs around 10% of your entire car insurance premium. The amount of coverage you see fit depends on your current health insurance plan.

For example, if you carry maximum coverage, you only need a limited UIM policy; otherwise, you'll be paying for two plans with overlapping medical coverages. However, if you carry an insurance policy with limited coverage, you'll then want to maximize, if possible, your UIM protection because UIM will not only cover medical costs, but also wages lost due to injury.

What It Covers Underinsured Drivers Coverage?

Underinsured motorist coverage is for when an at-fault driver does have some auto insurance, but not enough to cover the costs of the accident. This is becoming an ever more common issue, because the basic liability insurance required by many states is not nearly enough to cover the damage done by most collisions. Again, skyrocketing costs of health care, along with the high costs of fixing vehicle body damage, have contributed to a situation where it makes a lot of sense to have underinsured motorist coverage or “UIM.”

Additionally, UIM will help cover medical costs and lost wages for those who have been in an accident that was the fault of another driver. UIM will often pick up costs that health insurance or the at fault driver's auto insurance won't pay. Many think of it as “filling in the gap” in a policy claim.