Uninsured and underinsured coverage. What’s the difference?

Why is it included in my auto and umbrella policies? Why is this coverage necessary? Am I paying for others who don't get their own policy?

By Justin Staebler – SVP Personal and Life Insurance

As Senior Vice President, Personal and Life Insurance, Justin is responsible for the team of advisors who provide home, auto and umbrella insurance, along with life, disability and long-term care solutions. He and his team are dedicated to helping individuals manage risk and protect what is most important to them.

Although you may be a careful driver who follows the rules of the road and has the right insurance coverage in place, unfortunately you may encounter other drivers without proper protection. In this article, I’ll explain how uninsured and underinsured motorist coverage can protect you and your family, along with the importance of including it in your auto and umbrella policies.

If another driver causes an accident and doesn’t have enough insurance coverage to compensate you, you could face costly, unexpected expenses. 

JUSTIN STAEBLER SVP, Personal and Life Insurance, Johnson Financial Group

Uninsured Motorists

Uninsured drivers simply are not covered by an auto insurance policy. According to the Insurance Research Council, about 1 in 8 drivers in the United States are completely uninsured. As a result, if an uninsured driver causes an accident, they will not have a policy in place to reimburse you for vehicle repairs or medical costs for you and your passengers.

Uninsured motorist coverage is designed to fill the gap between your costs and the other driver’s ability to pay.

What about hit-and-run accidents?

Accidents in which a driver flees from the scene fall into the same category as uninsured motorists, as there is no insurance policy in place to cover the driver’s liability. This coverage also applies if you or a member of your family are hit as a pedestrian – even if your vehicle wasn’t involved. Especially during the winter months when the sun sets early, it’s common for pedestrians to walk or run on the roads after dark. Decreased visibility can increase the risk of pedestrian accidents.

Underinsured Motorists

While underinsured drivers have an insurance policy, their policy does not provide adequate coverage to pay for all of the expenses of an accident. Some states may require smaller amounts of coverage, which may not be enough to pay all of your medical expenses and repair costs.

Wisconsin requires drivers to carry $25,000 per person and $50,000 per incident of bodily injury liability coverage. If you are involved in an accident where the at-fault driver lacks adequate liability insurance, your own underinsured motorist coverage will cover your expenses.

For example, if you are in an accident caused by an underinsured driver and sustain $30,000 worth of bodily injury expenses, the driver who hit you is only covered for $25,000. Your underinsured coverage will cover you for the remaining $5,000.

In many states, you may be required to purchase uninsured or underinsured motorist coverage. Generally, it is a good idea to purchase the same amount of coverage as your regular auto policy. Coverage tends to very affordable, generally costing only 5% of your annual auto insurance premiums.

Gain Peace of Mind for You and Your Family

If you want to proactively plan for the unexpected, your insurance advisors at Johnson Financial Group are here to answer your questions about these coverage options so you have peace of mind and protection for you and your assets. Contact an advisor today to learn more about underinsured and uninsured motorist coverage.