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WHAT AND HOW DOES THE UNDERINSURED MOTORIST COVERAGE WORK?

Posted by Wade Fisher on

All vehicles are mandated to have a car insurance to be registered in most of the states. Some of the drivers meet this specific criterion of having the state’s requirement of minimum liability insurance but may not necessarily have enough insurance to cover the damages after an accident. Supposing, the third-party insurance covers the damages, then the victim’s uninsured coverage may not be applicable. However, if there is something known as the ‘underinsurance coverage’ in the policies of the insurance company then the victim will be eligible to claim for compensations from the company beyond the third-party’s settlement fee.

To simplify it, the claimants generally having the underinsured motorist coverage means that they can collect insurance from their own insurance company even after receiving the settlement from the third-party insurers.

This policy works by the claimant seeking negotiations with their insurance company about how their case may be worth more than what was settled with the other party. And within the limitation of the policy, they will be able to collect extra amount from the company. But if the claimant had already been given by their company the medical expenses or any other form of reward then that particular amount will be deducted from the underinsured coverage policy issuance.

For example, if the claimant had received an amount of $20,000 from the third-party settlement and had also immediately after the accident collected an amount of $3,000 from their company for emergency medical expenses under the medical payment coverage policy. And assuming that the limit of the insurance company’s underinsured motorist coverage policy is $60,000.

If and when the claimant then convinces their company that their case was actually worth a total of $40,000 then he/she can avail under the underinsured coverage policy an extra amount of $17,000- deducting the third-party insurance and the medical expense allotted amount from the policy limit of $40,000.

To further collect the amount, the claimant needs to first present a legal and verified document that the third-party driver was underinsured. And also, submit documents stating from the other driver’s insurance company their client’s policy limits of his/her liability coverage and that the claimant settlement had been duly given an equal amount to their client’s policy limits.