In similarity with medical payments and PIP coverage, uninsured and underinsured motorist coverage provides for payments to be made to or in respect of yourself and your passengers in the event of injuries resulting from a car accident caused by another driver who is uninsured or underinsured.
Ordinarily, if you are involved in a car crash which is another driver’s fault, you would claim from the other driver’s insurance company. But what if the other driver has no insurance, or if they do have insurance, what if their personal liability limit is less than your claim? You can sue them of course, but what if they have few or no assets, or no significant income? And if they do have assets and a good income, what if you can’t locate them because you were the victim of a hit and run?
If you have chosen to have uninsured and underinsured motorist coverage under your policy then your insurance company will make good any amount to which you are entitled and which cannot be claimed from the other party due to insufficient or no insurance, up to your limit of coverage. In effect, your insurance company stands in the place of the other driver as though that driver had personal liability coverage with your insurance company (at your premium cost, of course). Naturally, your insurance company will try to recoup from the other driver any amount it pays to you, but it has the same problem if the other driver cannot pay or cannot be found.
Uninsured and underinsured motorist coverage is very important coverage for you to have, so don’t waive it or skimp on it. You should generally take the highest limit of coverage which your insurance company will allow. When you have done that, make sure that the umbrella coverage you have includes uninsured and underinsured motorist coverage. Sometimes it’s optional with those policies, and if that is the case with your umbrella coverage, be sure to take it.
Why is uninsured and underinsured motorist coverage so important? Because compensation for the consequences of the injuries which you might cause to others is no more important than the compensation which would be due to you for the injuries which others might cause to you. You are no less important than the stranger you insure with your personal liability coverage.