You probably know that there are countless drivers on the road who choose not to purchase auto insurance. What you may not know, though, is that being involved in a collision with an uninsured driver could lead to financial ruin.
Most people who do not have car insurance cannot afford to pay for property damage, hospital bills, and other damages they cause in collisions. So if you’re in a crash with an uninsured driver, filing a lawsuit will most likely be a waste of time.
This is why it is so important to purchase uninsured motorist (UM) or underinsured motorist (UIM) coverage. In fact, UM/UIM coverage is so important that some states have laws that require insurance companies to offer it to every driver who wants to purchase a policy. Although you typically have the option to reject UM/UIM coverage in writing, doing so could prove to be a costly mistake.
If you’re ever involved in a collision with an uninsured driver, your UM/UIM coverage will cover your losses up to your policy limits, minus your deductible. In most cases, your UM/UIM coverage will also offset the difference if the driver who caused your accident does not have enough insurance coverage to pay for your losses.
As such, it is a good idea to purchase uninsured motorist coverage if you can afford it. As a rule of thumb, you should purchase UM/UIM coverage that is equal to your liability coverage limits.
What Is Personal Injury Protection (PIP) Insurance?
Personal Injury Protection insurance, also called “no fault coverage,” will cover a portion of your medical expenses and often will cover lost wages in the event of an accident. It may also cover funeral expenses. PIP insurance differs from liability insurance in that it will cover your losses no matter who is found to be at fault for your collision. However, PIP coverage will not cover other people’s medical expenses or lost wages; it will only cover your own damages.
Although most states do not require drivers to carry PIP insurance, some do. These states are called “no fault insurance” states.
As you can see, uninsured motorist coverage and Personal Injury Protection insurance can both save you from financial ruin if you are injured in a crash with a driver who has no insurance or who has insufficient insurance to cover your losses. As such, you should definitely consider purchasing these policies when you renew or switch insurance providers.