Uninsured motorist coverage is additional coverage that is available from your automobile insurance company. It protects you if you are in a car accident with a driver who has no car insurance, and the accident is deemed to be that driver’s fault.
If you get hit by someone who has no car insurance, you would generally not bother trying to sue that person. Drivers who have no car insurance generally don’t have much money lying around either, so even if you won the lawsuit there is no probably no way to collect your award. Instead, you would make a claim against your own insurance company up to the limit of your uninsured driver coverage.
Most states require automobile insurers to include a minimum amount of uninsured motorist coverage in every car insurance policy, usually somewhere around $20,000, but you can of course purchase additional uninsured coverage.
However, uninsured driver coverage cannot exceed the amount of your primary coverage. For example, if you have $100,000 in coverage for your own potential negligence, you can only have up to $100,000 in uninsured coverage. That’s just a financial issue for insurers. Because uninsured coverage is very cheap compared to regular liability coverage, insurers don’t want their insureds purchasing only the minimum liability coverage and then loading up on uninsured coverage.
The benefits of uninsured motorist coverage are very straightforward; you get insurance against being hit by an uninsured driver. You might think that you will never get hit by an uninsured driver because almost every state requires drivers to have car insurance. The fact is that there are a fair number of uninsured motorists on the roads, and they get into car accidents. It is worth the money to make sure that you have uninsured motorist coverage, and that you have just as much uninsured motorist coverage as your regular liability coverage.
There is no downside to uninsured motorist coverage per se, other than the fact that it costs money that you lose if you are never hit by an uninsured motorist. There could potentially be a downside to filing an insured motorist claim if you do get hit by an uninsured driver. The downside would be that, depending on the language in your insurance policy, you might lose the right to pursue the negligent driver for damages; you would be limited to the amount that you recover from your own insurance company. That is not usually much of a downside, however, because uninsured drivers rarely have any assets to take if you sue them.
If you think that the driver who hit you is uninsured, you should give your insurer notice as soon as possible that you intend to file an uninsured claim against it. Some car insurance policies place strict deadlines on their insureds to notify the carrier of any potential uninsured claims. Don’t delay. The deadline could be as brief as 30 days. If the other driver tells you that he/she does not have car insurance, or, if he/she refuses to give you any insurance information, and you can’t get the insurance information in any other manner, inform your insurer immediately that you intend to file an uninsured claim against your insurer.
In general, an uninsured driver claim progresses in the same way as a regular car accident claim, except that the claim is against your own insurance company. There will be pretrial investigation, disclosure of your medical records, and depositions of witnesses. But one very important difference is that, if you and the insurer cannot agree on a settlement figure, you cannot file a lawsuit against your insurer. Instead, you have to submit your claim to binding arbitration, which is a more informal procedure than a court trial. An arbitration is a hearing in front of an arbitrator (or sometimes a panel of three arbitrators), and the arbitrator or arbitrators will decide who wins. The down side of binding arbitration is that, unlike a court trial, the losing side in an arbitration has very limited rights of appeal. Basically, the losing side in an arbitration is stuck with the decision.