by Michael Burman
You won't see this sign driving down Interstate 24 in Tennessee or Kentucky. All around you, many drivers operate an automobile with no insurance, or, the bare minimum automobile insurance required by law.
What is an uninsured driver? What is an underinsured driver?
An uninsured driver has no insurance at all. An underinsured driver is someone who carries automobile liability insurance, but the available insurance coverage is too low to provide full compensation for the injuries caused by the at-fault driver. For example, let's say you are injured in a car crash, and you discover the at-fault driver has an automobile insurance liability policy equal to the bare minimum required by law. The minimum amount of liability insurance required by law in Tennessee and Kentucky is $25,000. Let's say your medical bills exceed $75,000. Unless the at-fault driver is wealthy, you can recover the at-fault driver's $25,000 insurance limit, but generally, you will not recover a penny more from the at-fault driver who is likely to take bankruptcy if you go after the at-fault driver's personal assets. To protect you and your family, underinsured automobile coverage is something you should consider.
Underinsured motorist coverage for bodily injuries is a specific category of automobile insurance that you buy to protect you and your family from an at-fault driver with the bare minimum insurance limit of $25,000. Before you purchase underinsured coverage, ask your insurance agent for a quote so you can see what that extra underinsured coverage will cost you per month.
I strongly advise you to do a quick check-up and learn how much underinsured motor coverage is listed on your policy. Find the declaration page to your automobile insurance policy, or, if you drive more than one vehicle in your household, find the declaration pages to all your vehicles. Look at the declaration page to see what coverage you bought and paid for, and how much insurance coverage your money purchased for you. I strongly recommend purchasing no less than $100,000 of underinsured motorist coverage. Purchase at least $50,000 in underinsured motorist coverage if that is what your budget allows, but make the purchase. Of course, discuss your insurance needs with a trusted insurance agent before making your purchasing decisions to see how much underinsured motorist coverage is right for you and your family. Underinsured coverage is not extraordinarily expensive and is well worth the money when you, or a family member, experience the unexpected injury.
Let me show you how underinsured motorist coverage takes affect and how it makes a difference for you. Let's say you purchased $100,000 in underinsured motorist coverage. Let's say the at-fault driver has $25,000 in liability coverage. Under Kentucky and Tennessee law, the bare minimum of liability coverage required by law is $25,000. Under Kentucky law, after the at-fault driver pays you $25,000, then your $100,000 in underinsured coverage stacks on top of the $25,000 from the at-fault driver, giving you a total of $125,000 in total insurance to pay against your damages. In Tennessee, underinsured motorist coverage does not stack on top of the at-fault driver's coverage. In Tennessee, the liability coverage amount is subtracted from the underinsured motorist coverage amount you purchased. So, under Tennessee law, once the at-fault driver pays the $25,000 in minimum required coverage, you subtract the $25,000 from the $100,000 in underinsured coverage under your automobile policy. The result under Tennessee law is $100,000 in total insurance to pay against your damages.
Please note that I have highly simplified this process to illustrate how underinsured coverage works with liability coverage. There are various technicalities you must meet to collect the full amount of underinsured automobile coverage. In addition, insurance laws can vary from state to state. How underinsured motorist coverage is applied to any particular case must be studied with care.
Contact me if you have questions, or need help understanding the coverages under your policy. Underinsured motorist coverage can make a huge difference in protecting you and your family.