The Difference Between Uninsured and Underinsured Motorist Insurance Coverage

In a car accident or motorcycle accident in New Mexico where you were not at fault, the auto insurance of the other driver will pay for your injuries and the damage to your vehicle. Yet, what happens when the at-fault driver lacks any insurance? Or, suppose your injuries and losses exceed the amount of the negligent driver’s car insurance coverage—who pays for the costs that exceed your liability coverage?

In these situations, having uninsured motorist and underinsured motorist coverages is crucial. Although often confused for being the same thing, these two types of insurances are distinctly different. For example, a passenger bus and a passenger plane may get you to your destination either way, but you must admit that the two are very different vehicles. Similarly, uninsured and underinsured coverage accomplish similar objectives, that of enabling you to cover the cost of damages, but have significant contrasts. 

So what is the difference between the two coverages? And how does knowing the difference benefit you?

What is Uninsured Motorist Coverage?

Uninsured motorist coverage is for when a driver who DOES NOT have car insurance brings about an accident that results in your injury or damage to your property. In this case, your uninsured motorist coverage will help you pay for damages caused by the uninsured driver up to the limits of your policy.

Uninsured motorist coverage follows the person rather than his or her car. So this coverage can be claimed even if you are not inside your vehicle when an accident occurs. It applies whether you are driving, walking, biking, or sitting on a park bench.

Therefore, uninsured motorist insurance may cover the following situations:

• Hit-and-run accident by a motorcycle or car

• Pedestrian accident by a motorcycle or car
• Bicyclist accident by a motorcycle or car
• Crimes committed involving the use of a car including drive-by shooting, kidnapping, theft, or when a car is used in any way as an accessory to a crime
• Several other situations involving a car with a negligent driver

A hit-and-run driver is considered to be an uninsured driver. Thus, if you are involved in an accident caused by a driver who flees the scene and cannot be identified, you must have uninsured motorist coverage in order to receive compensation for your injuries and damages.

Real-life examples include one settled claim that involved the theft of a purse by a criminal operating out of his or her vehicle. The woman was able to be compensated thanks to an uninsured motorist claim on her auto policy. In another case, the family of a police officer who was killed while in the vehicle of an uninsured motorist received compensation using uninsured motorist coverage to recover damages.

What is Underinsured Motorist Coverage?

In the case of underinsured motorist coverage, the at-fault driver DOES have car insurance, while you again are not the at-fault driver. This coverage applies when the costs of your damages are greater than the amount of the liable person’s insurance limit. You can claim the difference by means of your underinsured motorist coverage.

Here’s the simple explanation: Suppose an accident occurs and the at-fault driver’s insurance policy only covers $25,000 for bodily harm, but your medical bills total $30,000. Who pays the additional $5,000?

If you have underinsured motorist coverage, you can make a claim under your own policy to pay the additional costs that the at-fault driver’s car insurance fails to cover. Without this coverage, you would be forced to pay out of pocket for those excess expenses.

There are also circumstances where you may file an underinsured motorist claim even if you were not driving a vehicle, such as with a pedestrian or bicycle accident.

What Compensation Can You Receive from Uninsured and Underinsured Motorist Coverage?

Both uninsured and underinsured coverages will vary depending on the specific policy terms but usually include the following damages:

• Medical expenses including ongoing and future medical care
• Lost wages and future earnings
• Lost personal property replacement value
• Pain and suffering
• Funeral expenses
• Other injury-related expenses

Why Being Covered is Important

Having both uninsured and underinsured motorist coverage is an important protection to have, especially with the number of drivers on the road either without any insurance or only carrying the minimum liability coverage. In fact, recent statistics show that New Mexico has an especially high amount of uninsured motorists. It is estimated that over 20 percent of drivers in our state do not have auto insurance. That’s about 1 out of every 5 drivers!

It is important to know what types of coverage are available, understand how each distinctly benefits you, and make sure everything you need is included in your policy. That way, coverage is there for you when you need it.