Uninsured / Underinsured Motorists
In the event of a car accident, the at-fault driver’s car liability insurance provider would be the injured driver’s first source of compensation for all the damages (he/she would suffer) resulting from the injury – this is if he/she lives in a tort state. In no-fault states, however, a driver’s own insurance provider pays for his/her medical treatment and lost wages no matter whose fault the accident is.
Car liability insurance, whether the traditional tort-liability policy or the newer no-fault policy, provides those who get involved in road accidents with the much needed financial safety net; this is why all US states, with the exception of New Hampshire, declare it mandatory for all drivers.
Under a tort-liability policy, physical injuries and damage to property (like vehicle, fence or house) are covered by the at-fault driver’s bodily injury liability policy and property damage liability policy, respectively. A no-fault policy, however, while covering a policy holder’s own medical treatment and lost wages, does not pay for damage to property. For this coverage, the policy holder will need to purchase a separate property damage liability insurance, which will cover any property that he/she may damage in an accident.
There are currently 9 states which require the no-fault system: Utah, North Dakota, New York, Massachusetts, Michigan, Minnesota, Kansas, Hawaii and Florida. The states of Kentucky, New Jersey and Pennsylvania are known as the “choice states” as these allow their drivers to choose between the tort and no-fault car liability insurance policies; all other states require the tort-liability policy.
Despite the car liability insurance being a mandate, 1 in every 8 drivers in the US remains uninsured, according to the Insurance Research Council. Thus, for an insured driver’s assured protection (if ever he/she figures in an accident wherein the driver at fault is either uninsured or underinsured) as many as 20 states and D.C, require Uninsured / Underinsured Motorist coverage to all its drivers. These 20 states are Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Vermont, Virginia, West Virginia, Wisconsin and Illinois.
Each state determines the minimum amount of UM and UIM coverage that drivers should carry. In states where UM and UIM coverage are not required, drivers are free to purchase these from their insurance providers.
Uninsured motorist coverage, which refers to the (total) absence of coverage on a vehicle, is designed to cover all economic losses and damages due to accidents involving an uninsured driver, a stolen vehicle and, in some states, an unidentified hit & run. Underinsured motorist coverage, on the other hand, refers to the inadequacy of the policy limit of the driver at-fault to pay for all the damages suffered by the victim.
In no-fault states, colliding with a driver, who is uninsured or underinsured, may not really present a big problem since claims are filed by each driver with their own insurance provider. Uninsured/Underinsured motorist coverage, however, will provide the innocent victim the extra financial protection which he/she may still require to fully recover from the accident.
Many law firms provide information which drivers, who figure in accidents that involve other drivers who are uninsured or underinsured, may find really helpful.