how underinsured motorist coverage works
let s say you re in a car accident that wasn t your fault after making sure everyone s ok you exchange information with the other driver take photos of the damage and file a claim with your insurance company but when your insurer contacts the other driver s insurer for payment it turns out that they only carried the minimum amount of liability coverage which won t be enough to cover the repairs to your damaged car if you have underinsured motorist coverage it will kick in to cover the additional costs up to the limit of your policy underinsured motorist coverage typically includes two parts 2however in some states only uim bodily injury coverage is available 3you can t file a claim for more than the actual costs you had as a direct result of the accident benefits of underinsured motorist coverageliability insurance which pays for the cost of damages due to an accident for which you re at fault is required in every state except new hampshire virginia lets drivers opt out of purchasing insurance if they pay a 500 annual fee 4 each state sets its own required minimum coverage amounts but the state minimum amount may not be enough to cover the costs of repairing or replacing your car after a serious accident or to pay for medical bills as you recover from your injuries that s where underinsured motorist coverage can prove beneficial if you re in an accident where the driver who was found to be at fault does not have enough insurance to cover the cost of damages from the crash your uim coverage will pay for the rest up to your own policy limits 2some states and insurance companies allow you to stack or combine your coverage limits for um uim bodily injury coverage when you have multiple vehicles on the same policy for example if your policy covers two vehicles and each has a 35 000 uim coverage limit you may be able to stack them to create a limit of 70 000 after an accident 5