Snowbirds Ask: What is Underinsured Motorist Coverage and Do I Need It?

If you are travelling by car, throughout the United States and Canada, it is important to understand the three major car insurance problems throughout North America and where underinsured motorist coverage comes into play:
  1. The majority of car drivers only have minimal third party liability protection. The minimum coverages vary from state to state but on average only $15,000 is available to pay a claim.
  2. In order to reduce insurance claims, and to protect the driver who has little to no coverage, most jurisdictions instituted “Tort reform” limiting insurers Tort and Contractual obligations to pay claims.
  3. The obligation to protect yourself and your family now lies on your shoulders. The cost of the protections are pushed on the driver with the deeper pockets.
For most car drivers, who are involved in relatively minor accidents, having a small car insurance policy is not a big deal. In fact, close to 80% of all car accidents fall into the minor accident category. For those of us who drive literally everywhere, you will come into contact (pardon the pun) with car drivers who have minimum liability limits. It is the serious, catastrophic cases where your own insurance policy can become your only salvation.


How Does Underinsured Motorist Coverage Work?

Underinsured motorist coverage is an optional addition to your car insurance policy. If you have ever talked to an insurance broker you know (subject to an additional Premium) you can increase the protections offered. This is true for your policy limits, collision coverages, personal insurance protections etc. For example, rather than having a car that is insured at the third party liability minimum (which in some states is $10,000) you can increase your coverage upwards to $2,000,000. This extra coverage insulates you from judgements up to the face value of the policy.

If you are involved in an accident and the other driver is at fault for the accident, you have the right to make a legal claim against them. If the defendant driver does not have enough insurance to pay for the damages, your underinsured motorist coverage can help cover the difference between the driver’s insurance coverage and the amount of damages you have incurred.

Underinsured Motorist Coverage Example

Let’s say, you are involved in an accident and the other driver’s insurance policy has a maximum coverage limit of $50,000, but the damages you have incurred total $100,000? Your underinsured motorist policy will cover the additional $50,000 in damages, up to the limits of your policy. It’s important to note that underinsured motorist coverage only applies if the other driver is at fault for the accident and does not have enough insurance to cover the damages. If you are found to be at fault, your own insurance policy will generally be responsible for covering the damages.

Should Snowbirds purchase Underinsured Motorist Coverage?

Absolutely. Don’t leave home without it. This type of insurance can help protect you by covering the difference between the other driver’s insurance coverage and the amount of damages you have incurred. Remember while driving through the US, most states have ridiculously low minimum car insurance liability policies. Making sure you have the correct coverage is relatively inexpensive and it protects you and your family.

According to data from the National Highway Traffic Safety Administration (NHTSA), the states with the highest number of traffic fatalities in 2019 were Texas, Florida, and California. These states also have large populations, so the number of car accidents may be higher in these states due to the greater number of vehicles on the road. Furthermore, it is also important to determine which States have the most uninsured car drivers let alone underinsured. Albeit, it is difficult to determine the exact number of uninsured drivers in each state, as this information is not consistently tracked. However, some estimates suggest that states with highest numbers of uninsured drivers include Florida, Mississippi, and Texas, two of which have the most fatalities. It’s important to note that the rate of uninsured drivers can vary widely within a state and can depend on a variety of factors such as the cost of insurance, the level of enforcement of insurance requirements, and the overall economic conditions of the area.

Here are a few additional reasons why Snowbirds need to purchase underinsured motorists insurance:

  • While travelling through various states and provinces you will unquestionably drive through areas where car accidents are at a higher risk.*
  • Most people can’t afford to be involved in an accident where the defendant is underinsured. US hospitalization costs alone are astronomical.
  • The cost of underinsured motorists insurance is relatively inexpensive.

Ultimately, the decision to purchase underinsured motorists insurance is a personal one which depends on your specific needs and circumstances. It’s a good idea to speak with an insurance agent or broker to get more information and advice on this type of coverage. From our advice is simple, this is a critical form of insurance you need to have.


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