Do you really need underinsured motorist coverage?

Question

Correct me if I'm wrong, but won't collision/comprehensive pay for ANY damage to my car REGARDLESS of fault? ...and since most people have health coverage, is it really necessary?

Answer 1

I'm here to correct you because you're wrong.

Uninsured / underinsured coverage specifically addresses damage caused by someone who doesn't have any coverage or insufficient coverage to indemnify you if they cause an accident.

Your comprehensive / collision coverage will cover your damage to its limits - let's say you have $10,000 collision coverage. The other driver totals your $35,000 car, and doesn't have any insurance. As a result, your insurance company writes you a check for $10,000 to total your car, and you're left with a $25,000 loss.

The un / under coverage makes up the difference, paying you the extra $25,000.

Just from a financial point of view, it makes good sense. Also, un / under coverage is generally a few bucks a month for premiums. It doesn't make sense NOT to carry that coverage.

-Stuart

Answer 2

aBSOLUTELY!

I work for auto insurance company and so many times people put no on their policy and it comes back to bite them in the bottom!

It is needed and only if you have broad  collision coverage will you be covered no matter who's at fault but that's only to cover damages to the vehicle.  And not the personal injuries.  

And most people don't have health ins.  I'd say about 70% of my clients don't have reliable health ins.  The only ones that work for my company is Blue Cross/Blue Shield.  Any others don't cover these instances.  it's in the fine print.

That's why this is the most expensive coverage on auto policies.

hope I helped.

Answer 3

Collision will pay regardless of fault for damages to your car.  Your deductible can be waived with UMPD though.  U/M will pay for injuries to any passingers you may have and U/M can pay for things like lost wages due to injuries from an U/M driver.

Depending on where you live the cost for U/M is not much and it's very advisable that you carry it.

Answer 4

Underinsured is for injuries not your vehicle damages, it has nothing to do with comprehensive and collision.

A lot of people DO NOT have health insurance.

Some states minimum liability insurance that is required is extremely ridiculous. Take Louisiana for example. The min bodily injury coverage you have to carry is $10K. That could easily be eaten up in 1 ER visit, if the accident were serious enough.

Underinsured is a good coverage to have. They pick up additional bills for YOU if the at fault driver doesn't carry enough coverage.

And Ultimately, your health insurance is going to want to be reimbursed for the expenses they paid out. If the at fault driver didn't have enough coverage, and you didnt have Under insured, then YOU could be paying your health carrier back out of pocket.

Hope this helps

Answer 5

Not really, no. Everything you say is true, although there are certain special cases where it might be useful.

I do not carry uninsured motorist on any of my cars for the same reason you state. I DO however carry it on my motorcycles. The reason is that although the health/collision insurance covers all the damages to me and my bike, what if I am disabled in a motorcycle crash? Health insurance will put me back together, but won't pay for lost income if I can no longer work. Having some underinsured motorist coverage can help here.

The problem with UM coverage is that it covers a specific peril, and not an asset. By definition, it is incomplete coverage. A better solution for protecting your income is disability insurance that covers you for all disabilities where you cannot work, not just accidents with uninsured motorists. Why pay for UM/PD when a normal collision policy covers you anyways.

Answer 6

Your Collision coverage will pay to repair or replace your vehicle if you hit an object or are involved in an accident with someone without Liability Coverage. Underinsured Motorist Coverage will pay to repair your vehicle if the damage caused by an "at fault" driver that does not have a high enough limit to make the repair. The premium is very reasonable. If you do not have it, and the damage to your vehicle is greater than the coverage the other driver has, you will have to have it repaired under your Collision Policy and pay the deductible.