When we write an auto insurance policy we always try to match the Uninsured/Underinsured Motorist insurance coverage to the Liability limit on the policy. That's the highest limit you can have, and we always recommend it.
Most people consider what limits they want based on the possibility of having to pay another party in the event of an accident or injury. Uninsured/Underinsured Motorist insurance and SUM (Supplementary Uninsured Motorist Coverage) coverage pays what YOU should be able to collect from another motorist who is responsible for your injuries you suffer in an accident. You can select the limit that makes you feel financially secure, up to your liability limit, and your policy would then pay your damages that exceed the amount received from the at-fault motorist and/or their insurance company. Basically, if your award is higher than the limit carried by the other party, your coverage would pay.
In order to have SUM coverage activated, any one of the following six conditions must exist as regards the other motorist:
1. They have no insurance at all. Believe me, this does happen.
2. The owner and operator of the car is unknown (better known as a Hit and Run)
3. They have insurance, but their limits are lower than yours.
4. They have insurance, but it's limits have been used up to pay others injured in the same accident.
5. They have insurance, but the claim is denied by their insurance company.
6. They have insurance, but it is unavailable because their insurance company is insolvent. (out of business, etc.)
Here's an example: Let's say you purchased a policy with a SUM limit of $100,000. You are subsequently injured in an auto accident by a motorist who only has the minimum limit of $25,000. If your damages are determined to be $60,000, then you would collect $25,000 from the at-fault motorist and $35,000 under YOUR SUM coverage from your company.
If the other driver had no insurance, you would collect $60,000 from your company. If the damages had been higher, you still would have another $40,000 available under your SUM coverage that you could collect.
This coverage is for bodily injury only, not damage to your vehicle.
Higher limits of Uninsured/Underinsured Motorist insurance coverage are not required by law because legislators decided that many people could not afford the coverage and that the financial burden should be placed upon those who can afford it. Unfortunately, there are many drivers on our roads with no insurance at all. So my recommendation will always be to buy the highest limit of this important coverage that you can afford.
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