What Happens if an Underinsured Driver Hits You?
Suppose you are forty years old, married, and have two kids and a decent job. A fair amount of financial responsibility goes along with your status as husband and father. You have a house, there are your kids to take care of, your retirement is in the future, and your kids’ education lies just down the road. There’s a lot you need to take care of.
Let’s say that you’re driving home from work one day when a young guy loses control of his car, crosses into your lane, hits your car— and you do not survive the accident. What can your family expect financially for support after you’re gone? The negligent driver’s auto insurance coverage and the coverage that you have dictates what
they can expect. A young man probably will have minimal insurance. The state minimum in Pennsylvania is $15,000 in liability coverage, and many drivers maintain this minimal level. Others may have $25,000, $50,000
or more in coverage.
Whatever the coverage may be, that is all you can realistically expect from the other driver. You certainly can sue him, and you may get a judgment against him for a far greater amount, but it is not likely that you will collect on the judgment. He may have no assets and therefore no way to pay the judgment. If you were earning fifty or sixty thousand a year, or even if you were earning only twenty or thirty thousand a year, the other driver’s 223 coverage may be inadequate because you or your family will lose your income for the remainder of your life. What your family gets from the other driver for your loss is at best a year or two of lost earnings—on which they now have to live.
How to Protect Yourself and Your Family
How do you protect yourself? Underinsured motorist coverage. Underinsured motorist insurance is exactly what it says it is. You can add underinsured motorist coverage to your insurance policy that will add additional coverage to pay for your losses should the at-fault driver not have enough coverage to fully compensate you or your family.
As an example, in a non-fatal accident situation, assume that the other driver has $25,000 in liability coverage. He causes an accident and you are injured. The value of your case—considering lost earnings, medical bills, and pain and suffering—adds up to $100,000. With no underinsurance coverage, you’re only going to receive $25,000. If you have underinsurance coverage, his insurance company will pay the limits of his policy and your own insurance company will pay the remaining $75,000 for your injuries. You receive the benefit of your decision to adequately cover yourself with insurance.
The significance of underinsurance coverage, however, is greater should you not survive an accident. Your family would forever lose the income you would have earned and even $100,000 in underinsurance coverage would not be enough to provide for them.
In buying auto insurance you should consider the different ways of maximizing your underinsurance coverage. You can purchase as much as your insurance company will allow, and you can take advantage of a concept called “stacking.” If you own more than one car, ask your insurance agent about stacking of insurance and he or she will explain how it works. Or you can call me for an explanation of the term. A brief definition will also be found in the next chapter.
