Considering whether or not to add underinsured motorist coverage to your auto policy can be challenging for some people. While some states offer compensation to injured drivers and accident victims, other states aren’t quite as generous, meaning that the burden of protection and coverage falls upon you, the consumer. However, just like when you consider adding or eliminating any kind of insurance coverage to your policy, it’s wise to weigh the pros and the cons before rendering a final verdict.
Understanding the Basics of Underinsured Motorist Coverage
You are a responsible person. You have car insurance. You understand that if you don’t have car insurance that you could get in trouble with the law. However, the person who just smashed into you after plowing through a stop sign just let his policy lapse. He hit a rough financial patch and didn’t have the money to pay his premium that month. This leaves you holding the bag; responsible for footing the coverage and the cost of repair to your vehicle, without help from any insurance company. That is, unless you have uninsured or underinsured motorist coverage.
Pros of Underinsured Motorist Coverage
No. 1: State Requirement
In states that do not provide extra coverage or protection against underinsured or uninsured motorists, this kind of coverage is a requirement. This type of requirement is much more common in states with the highest rates of underinsured and uninsured motorist reported accidents.
No. 2: Benefits
Underinsured motorist coverage is your best chance at compensation for injuries sustained in an accident, medical bills, lost wages, pain, suffering and damage to your vehicle – things that the offending party’s insurance policy would typically cover. Without uninsured or underinsured motorist coverage, you are entirely on your own.
Cons of Underinsured Motorist Coverage
No. 1: Cost
As with anything else associated with your insurance policy, good coverage doesn’t come cheap. Even if you shop rates like crazy, you are likely to see a spike in your premium when adding uninsured or underinsured motorist coverage to your policy. Be prepared for that.
No. 2: Vague Terms
Not all insurance companies are created equal. In fact, less than reputable firms will use vague terms on purpose, so that they have the option of getting out of paying a claim. When shopping for an insurance policy, find one with clearly defined terms from a company with a stellar reputation so that you don’t find yourself left out in the cold in the event of an accident.
Ultimately, when making the choice to add or to continue carrying underinsured motorist coverage, or increasing benefits to an already established policy all boils down to your security on the road. Research the number of accidents in your state and find out how many of those accidents involved uninsured or underinsured motorists in order to determine how likely that situation is to befall you. From there, you can make a more educated decision.