Drivers in Canada are compulsorily required to have third-party liability insurance. They can be subject to heavy fines and penalties in case they don’t have one. However, what happens when such an uninsured driver is involved in an accident causing injury to a third party? Who would cover the costs of such accidents in the absence of insurance? Here is where the uninsured motorist insurance comes into the picture.
This article will discuss Uninsured Motorist Insurance (UM) and whether you should purchase one or not. If you are in Calgary, do not forget to check out Surex for affordable rates and more details on all types of car insurance.
When does Uninsured Motorist Insurance coverage work?
Uninsured Motorist Insurance is basically an extension of the auto insurance policy. It covers your medical bills or other expenses due to the accidents or injuries caused by another driver who doesn’t have their own insurance.
Uninsured Motorists Coverage provides coverage in the following situations:
- The at-fault driver doesn’t have liability car insurance (Uninsured Motorists) and has caused an accident resulting in damage to property.
- The at-fault driver is underinsured. Here, the driver has insurance but not sufficient funds to cover your bills & expenses. In such cases, the balance amount is being covered by the injured party’s Uninsured Motorist Insurance.
- The at-fault driver’s insurance company doesn’t allow coverage or has ceased its business. This normally happens when the insurance company has gone bankrupt or, for some reason, has exited the market.
Expenses covered under the Uninsured Motorists Coverage
The following expenses incurred post-accident are covered by the Uninsured Motorist Insurance.
- Medical & Hospital Bills
- Compensate wages/ salary if you couldn’t work due to injury
- Car damage as covered in the policy of some states
- Even funeral expenses
UM coverage options, available limits, and imperative requirements vary widely by state. Some states would require UM coverage, while others don’t. It is always, if optional, worth considering the uninsured motorist coverage.
To explore the option, you must consider the best assistance for such policies.
Uninsured Motorist Insurance Coverage Variations
Depending on the state policies, some common variations are typically grouped under the UM coverage.
Uninsured Motorist Bodily Injury insurance (UMBI)
This variation of the Uninsured Motorist Insurance provides protection if you are hit by a car as a pedestrian. It typically covers your medical bills and even bygone wages/salaries, in some cases.
Uninsured Motorist Property Damage (UMPD)
If there’s any vehicle damage incurred during the accident, the uninsured motorist’s property damage policy covers the expenses. It is also applicable in hit & run cases. Depending upon the state and its policies, UMPD may cover personal property damage along with vehicle damage. However. UMPD is not available in all the states.
Underinsured Motorist Bodily Injury (UIM / UIMBI)
Underinsured Motorist Bodily Injury (UIMBI) is also a type of Underinsured Motorists Insurance. In this variation, the at-fault driver carries little insurance to pay off the expenses. He does not hold enough liability insurance to cover the expenses of medications, hospitals, or lost wages/salaries. Hence, UIM covers the expenses for you & your co-passenger for all the expenses.
Underinsured Motorist Property Damage (UIMPD)
The underinsured motorist property damage would cover the expenses of the property/vehicle damaged in the accident by an underinsured motorist who does not hold sufficient insurance to pay off the bills. So, the policy would cover your remaining damage expenses for a vehicle as well as personal properties.
Why should you consider Uninsured Motorist coverage?
Even though UM insurance isn’t compulsory in your state, having it can definitely provide a little more security towards the risks involved. According to the studies, one in every eight drivers is uninsured. Thus, there are 12% chances of you being involved in an accident where the party at fault wouldn’t have an insurance policy.
UM coverage basically holds up for your expenses incurred due to the accident involving an uninsured driver. Otherwise, the expenses could be a major burden.
However, if you consider compensating for it with good health insurance, you may consider not taking UM insurance. But, health insurance deductibles can be higher than an Uninsured Motorist Coverage. Thus, the choice is yours to make.
Uninsured Motorist Coverage Limits
Keeping in mind that Uninsured Motorist converge isn’t as popular as some others, you can decide upon the limit of different components involved. Limits can be set in the following ways.
- The split limit, where the limits would split up into two – pay-out per person (sustained by one person) and the maximum pay-out per accident (sustained by all). The split can also be determined in terms of different components of the policy. For example, if you have comprehensive UM insurance, a maximum coverage limit can be determined for bodily liability or property damage.
- The single combined limit for all the injuries in the accident.
These limits are different for every insurance company. Thus, you must strike an agreement on these limits before taking up the policy. Also, you should consider the current coverage you carry before deciding on a limit. For example, if you already carry decent health insurance, you could set the bodily liability limit at a lower level while setting the property damage limit high.
The Uninsured and Underinsured insurance policies make up for the inability of other drivers to take up the compulsory level of insurance. At the same time, it safeguards you against a heavy drain of financial resources if anything of this sort happens with you.
The limits & coverage of the policies would be different in all the states. So if your state wants a certain minimum coverage limit, you would be required to get it when you buy the car or auto insurance.
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