What comes to your mind after the mention of the term underinsured? It is important not to confuse that with the term uninsured. After all, an uninsured motorist doesn’t have any auto insurance. If that’s different from being underinsured, what does it mean when one is termed so? That’s a good question, and you better get the answer right. Otherwise, you may find yourself in hot soup. Fortunately, this article leaves no stone unturned to ensure that you get to understand all the things you need to know about being underinsured. Let’s get started right away.
What is the Meaning of Being Underinsured?
People often realize whether they are underinsured once there is a collision. If under such circumstances, you realize that your car insurance plan isn’t sufficient to compensate for all the loss or damage at that point, then it goes without saying that you are underinsured. In most cases, that’s due to the plan having a small maximum limit. The bottom line is that you are underinsured if your insurance plan doesn’t rise to the occasion when a need arises.
It is important to note that having an insurance plan that meets the minimum requirements set by your state doesn’t rule out the possibility of being underinsured. After all, it feels safe to have such an insurance cover. Unfortunately, many are times when states don’t consider worst-case scenarios when setting these minimum requirements.
Remember that the minimum limits usually differ from one state to another. So, don’t be surprised if one person is well covered whereas the other is underinsured despite having insurances that meet their respective states’ minimum requirements. In most cases, these minimums are set per person or accident. Therefore, take note of these figures too to avoid assuming that you aren’t underinsured yet that’s the case.
That said and done, it is impossible to tell whether you are underinsured until the cost of the loss or damage is calculated. Until the conclusion of these calculations, one can’t know for sure whether this is their fate. As a matter of fact, you may be well insured going by one accident but underinsured in case of another one.
What Happens In Case of One Being Underinsured?
One can’t stress enough the danger of getting into an accident only to realize that you are underinsured. That’s because your plan maximum limit won’t be enough to compensate for the loss or damages. What happens if the other party takes the matter to court? Obviously, the compensation paid will be less than what they deserve. The court battles can be draining physically, emotionally, and even financially. So, do you see the risk of being underinsured? It is a situation that has seen many underinsured motorists rendered bankrupt.
If you are lucky, the insurance of the other partner may pay the balance left behind once your insurer pays what’s required. Nevertheless, it often happens if the motorist is uninsured or underinsured. Additionally, it is too risky to rely on such luck.
What does it mean to the Motorist if Underinsured?
The answer to this answer depends on your insurance policy. For instance, some covers have protection against the uninsured and underinsured motorists. The commonly used terms by insurance providers are abbreviations such as UIM and UM. Thanks to this coverage, you get a boost when the loss or damages exceed the maximum limit of your policy. Your underinsured motorist insurance plan can cover several things. Often, the expenses include funeral services, car repairs, lost wages, medical bills, pain, and suffering.
In addition to your insurance plan, the state you live in can also determine the answer to this question. In some states, an uninsured and underinsured insurance policy is mandatory. On the other hand, it is not a law requirement in other states. That said and done, what this insurance coverage covers also depends on your state of residence. For example, if you reside in Minnesota or Nebraska, expect the coverage to cover bodily injuries but ignore any property damages. In the same vein, Virginia and Vermont residents will enjoy property damage compensation courtesy of underinsured motorist insurance.
Limitations of Underinsured Motorist Claims
In most cases, there are usually shortcomings associated with underinsured motorist claims. For instance, the period it takes to evaluate and settle such claims is often more extended than those needed on typical insurance claims. There is usually a need to wait until determining the cost spent on treatment. In some cases, the severity can be intense, thus needing time to heal and determine the cost. Expect many court cases under these circumstances as well. In most cases, the two parties, or one party and the insurer, often disagree.
Conclusion: About Being Underinsured
The difference between someone underinsured and another who is uninsured is quite significant. On the one hand, an uninsured person lacks valid insurance when he needs to file a claim. Several instances could lead to such a scenario. First, it could be the lack of insurance renewal once the set period lapses. Alternatively, the individual may fail to pay the insurance premiums on time, thus rendering him uninsured. Last but not least, it could be a case of someone who chose not to have an insurance plan at all. Regardless of the reasons, all the scenarios define an uninsured person.
On the other hand, an underinsured person has an insurance policy. Unfortunately, its maximum limit falls short of the cost of the loss or damages arising after an accident. Consequently, some losses and damages remain unpaid even after your insurance provider chips in what the law requires. It is no secret that it is a situation you wouldn’t like to find yourself in. It even sounds quite unfair, no doubt. This issue brings the need for emphasis on ensuring that you have the right plan for your need. You can always consider great sites such as FindMyQuotes to avoid such unanticipated outcomes. What’s the need for an insurance policy that won’t rise to the occasion in the hour of need?