Underinsured coverage is a type of insurance that provides protection for you and your family members who live in your home from losses and damages caused by the negligence of a driver who does not have enough insurance to cover all costs. This coverage extends to any passengers in your vehicle, as well as to those injured in a hit and run incident. In Pennsylvania, an alarming 8% of drivers on the road are uninsured, meaning that there is a 1 in 12 chance that the other driver won't be covered in the event of an accident. For this reason, it is important to consider purchasing underinsured motorist (UM) coverage.
This type of insurance can be used when the at-fault driver's liability insurance is insufficient. UM coverage is the only protection you can have against an uninsured driver. It may not cover property damage, but it does cover medical bills and other losses, such as pain and suffering, caused by their injuries. Drivers can decline coverage for uninsured drivers in states where it is optional, but insurance companies still have to offer it.
If you choose to decline this coverage, you will have to use another type of coverage or pay out of pocket if you are hit by an uninsured driver. In addition to underinsured coverage, which allows you to recover for losses that exceed the limits of the at-fault driver's policy, and uninsured coverage that allows you to recover if the at-fault driver does not have insurance, uninsured coverage applies if you are injured by a driver who hits the road. Both types of UM insurance are designed to replace the liability coverage that the at-fault driver should have purchased. If you already have some type of collision insurance and medical coverage, refusing coverage for uninsured drivers could be a good way to lower your premium.
Eighteen states and the District of Columbia require drivers to have some type of coverage for uninsured drivers. If you've been in an accident and it seems that you don't have this coverage as part of your policy, your lawyer should require your insurance company to file a signed exemption form with the text “Rejection of Protection for Uninsured Motorists.” It is important to understand all aspects of underinsured motorist coverage so that you can make an informed decision about whether or not it is right for you.