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How Uninsured and Underinsured Motorist Coverage Works

Every state in America requires drivers to carry a minimum auto insurance policy, yet almost 15% of licensed drivers have not purchased any coverage. People avoid buying motor vehicle insurance for different reasons. Some drivers are somewhat compelled to go against the law or are wary of insurance providers; some assume that they will never get into a car accident so why bother? However, the most common reason for lacking auto insurance is a poor financial situation. Many people have low incomes and a lot of debt, so they want to add car insurance fees to their monthly expenses.

When you are involved in an auto accident with an uninsured driver, recovering the costs of injuries and other damages becomes a dilemma. Typically, you would be able to claim reimbursement of your loss from the at-fault driver’s insurance company; but what are the options when they carry no form of car insurance at all? Filing a lawsuit against the perpetrator is bound to be fruitless because probability is that they have no money saved up to pay you. The driver who cannot afford to insure his/her car is unlikely to be well off. Legal action is only suitable if you have evidence indicating that the uninsured driver owns valuable assets that can be utilized to compensate you.

Purchasing uninsured motorist coverage is not mandatory in all states, but it sure does come in handy when you suffer a collision with an uninsured driver. Your own insurer will then be liable to pay for your damages if such a scenario occurs. You will not have to worry about lost income or paying medical and mechanic bills out of pocket. Even if your insurance policy does not provide full coverage of the damages, it will still relieve you of much financial burden.

According to bakersfield car accident lawyer, the uninsured motorist insurance policy is also applicable to hit and run accidents. Oftentimes, drivers hit another vehicle and flee before anyone can take notice of their identity; they most probably escape because they don’t have insurance to pay for accident damages. Sometimes the police is able to track down the fugitive, but other times the investigation leads to a dead end. If you are injured in an accident where the perpetrator could not be caught, uninsured motorist insurance will have you covered.

People often confuse uninsured motorist coverage with underinsured motorist coverage. Some car insurance companies may offer both coverage plans as a package, but otherwise they are both entirely different commodities. An uninsured driver is one who does not carry any auto insurance, whereas an underinsured driver is someone whose insurance policy is insufficient to cover all your damages.

Many people only buy the minimum auto insurance imposed by the state, so it makes sense that their policy cannot generate enough funds in the event of an accident. If the at-fault driver’s insurance liability limit runs out before your loss is covered, your underinsured motorist insurance may kick in. It is essential to note that the underinsured motorist insurance only takes effect if its coverage limit exceeds the other party’s accident liability limit.

Let us assume that you have suffered a loss of $50,000 in the car accident, but the at-fault driver only has $30,000 in liability coverage. If your underinsured motorist coverage limit is $20,000 then you cannot make use of it to cover the remaining expenses. Now if you had $40,000 in underinsured motorist coverage instead, you would be able to obtain $30,000 from the at-fault party’s insurer and another $10,000 from your own insurer; i.e. your insurer only pays the amount that exceeds the other party’s liability limit.

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