Uninsured or Underinsured Motorist Coverage – It’s Worth the Extra Cost

car accidentCarrying auto liability insurance or a state-approved bond, which will show a driver’s financial capability in compensating anyone who is innocently injured or whose property is damaged in an accident, is a requirement in all 50 states in the US. This requirement is meant ensure injured victims of reckless, negligent and irresponsible at-fault drivers that they have a chance of receiving compensation which will cover cost of treatment for their injury and loss of income.

The type of auto insurance, however, differs among states. While most states require a tort-liability policy, there are a few that require the no-fault auto insurance instead – the difference simply on how compensation may be sought.

In tort states, to be able to seek compensation, the victim of an accident usually needs to file a lawsuit against the at-fault driver (unless this driver makes an out-of-court settlement with his/her victim) and prove that the accident was a result of his or her negligent act. After liability has been proven, payments to cover bodily injury and property damage (this does not include payment for the at-fault driver’s own injuries and damaged property) will be made by the at-fault driver’s insurance provider. According to the website of the Mokaram Law Firm, any amount that will exceed the compensation that needs to be paid will already have to come from the liable driver’s own pocket.

In no-fault states, however, cost of medical treatment resulting from the injuries (of both drivers) sustained in the accident will be paid by each driver’s insurance provider, regardless of whose fault the accident is. This means no more need to file a lawsuit to be able to prove fault.

This state requirement, of carrying auto liability insurance, particularly in tort states, should be enough to assure anyone of the compensation that he or she may be deemed eligible by the court to receive. However, there is one very troubling major problem (related to this auto liability coverage) that the Insurance Research Council has identified – that 1 in every 8 drivers in the US continuously drives on roads and highways despite being uninsured. However, instead of catching these drivers and putting them behind bars, insured drivers are rather given the additional requirement of carrying Uninsured /Underinsured Motorist coverage on top of their auto liability insurance.

Due to the absence of coverage on a vehicle, Uninsured motorist coverage will cover all economic losses and damages suffered by an innocent victim. This coverage is most helpful if a person is hit by an uninsured driver, a stolen vehicle or a victim of a hit & run. Underinsured motorist coverage, on the other hand, is intended to cover the amount in excess of the policy limit of the underinsured motorist.

Uninsured /Underinsured Motorist coverage will definitely be additional costs for any driver; however, thinking about the benefits it will provide, it might just be worth the extra cost.

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