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How does underinsurance work?

While almost all states require drivers to carry underinsurance coverage, Kentucky is not one of them. However, because a 2012 study found that an average of one in every eight drivers have no automobile insurance whatsoever, Kentucky drivers might wish to purchase the extra coverage.

Underinsurance is insurance coverage that pays for damages caused by another motorist whose insurance coverage was insufficient to pay for all the damages. Depending on the amount of coverage limits a person selects, underinsurance pays for liability bodily injury and property damage caused by an underinsured at-fault driver. Underinsurance pays the remaining accident costs that the at-fault driver's insurance did not cover because the damages were more than his or her policy's limits. Motorists who purchase UIM coverage are assured that they will be protected from at-fault drivers who cause more damage than their insurance coverage can pay.

UIM covers bodily injury, including pain and suffering, medical expenses, income losses and funeral expenses for the insured driver and any passengers. It also covers bodily injury regarding hit-and-run accidents. Property damage includes vehicle repairs and damage caused to property owners, such as repairing or replacing a homeowner's fence or repairing landscaping damages. Some underinsured property damage policies include deductibles that the insured must pay prior to receiving the coverage.

Motorists who reside in states where the law allows for drivers to purchase the minimum amount of auto liability insurance may especially benefit from purchasing UIM coverage. Besides being very affordable, UIM coverage is generally set at the same amount of the liability the insured selected.

Car accident victims who suffer a catastrophic injury may wish to file a claim for compensation. With the advice of an experienced personal injury lawyer, they could hold a negligent driver liable for damages.

Source: Wallethub, "Uninsured/Underinsured Motorist Coverage: Do You Need It?", Karl Eisenhower, Jan. 21, 2015

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