How Much Uninsured & Underinsured Coverage Should I Carry?

The only thing worse than being in a car accident is discovering that the other driver doesn’t have insurance. Countless motorists are either uninsured or underinsured. Without coverage, a responsible party may not be able to pay for your medical costs, vehicle repair costs, or lost wages.

Having uninsured and underinsured coverage is the only sure way to protect yourself from these damages. But how much should you have?

Here is what you need to know about uninsured/underinsured coverage in Indiana. Also, here are tips for having a policy that offers the level of protection you need.

What Uninsured & Underinsured Coverage Is

In the state of Indiana, every motorist must have 25/50/10 coverage. This directly correlates with the legal minimums for each provision made by basic auto insurance plans:

• $25,000 per person for bodily injury
• $50,000 minimum liability for every accident
• $10,000 to cover property damage or property loss

Unfortunately, not every Indiana driver abides by insurance laws. It’s actually not uncommon for uninsured and underinsured parties to be involved in motor accidents. More distressing still, people who operate their vehicles illegally or without having the proper licensing and insurance are actually more likely to be in accidents.

Statistically, drivers who ignore motor vehicle rules often ignore more than one. Thus, they are more likely to overtake, speed, operate their vehicles while under the influence, or drive aggressively or erratically.

Being Uninsured and Underinsured Is Not One and the Same

An uninsured motorist may not have an active insurance plan at the time of a collision due to failure to pay premiums, failure to bind coverage, or insolvency of the company that has offered their coverage. Some drivers have the unfortunate luck of securing policies from companies that lack adequate financial stability.

In any case, uninsured drivers do not have the benefit of getting any financial assistance from insurers. They must pay all of the damages that they cause during accidents out-of-pocket. Unless these individuals have massive savings or high-value assets that they can sell, most uninsured drivers cannot cover these costs.

Conversely, underinsured motorists have policies in place but may not have the correct coverage limits for the actual damage amount. Although Indiana insurance companies cannot legally sell coverage with limits that fall below the 25/50/10 minimum, accident damages often exceed these limits, and out-of-state drivers may have purchased plans in other areas.

No matter what the reason, underinsured motorists are rarely able to pay a portion of total accident claims.

How Much Should You Have?

Uninsured and underinsured coverage is considered special, additional coverage. It is an inclusion that you can pay for when choosing your auto insurance plan. However, if you are still paying for your vehicle and have taken out an auto loan, your lender will likely have very specific requirements pertaining to this coverage.

Not only do auto lenders require borrowers to have it, but they also require specific limits to cover the costs of borrowers’ vehicles in the event
that they must total out.

By Indiana law, insurance companies cannot offer drivers uninsured/underinsured coverage with limits of less than $50,000. If you have already paid your vehicle off, and if the resale or replacement value of your auto is under $20,000, this basic minimum should suffice. However, if you’re still paying for an auto loan on a $60,000 car, your lender will require higher limits on this coverage, and you will definitely want higher limits for yourself.

An insurance broker or financial advisor gives you a breakdown of your ideal coverage limits based upon your finances.

Provisions for Property Damage and Bodily Injury

With a per accident minimum of $50,000, basic uninsured/underinsured coverage should be adequate for most circumstances. However, consider the limits for property damage in Indiana as it pertains to the minimum amount of basic auto insurance. With the 25/50/10 determination for coverage limits, $10,000 is a relatively small allotment for property damage or loss.

If driving a $20,000 car that totals out, the provisions don’t completely cover your losses. Although the at-fault driver may have met the legal minimum for insurance, the driver is considered underinsured. Understanding the value of your potential losses and how this relates to the coverage gives you insight into if you should bind more than the minimum $50,000 in uninsured/underinsured coverage.

Learn More About Uninsured & Underinsured Coverage

It’s additionally important to note that insurance companies aren’t eager to pay these monies out. In these instances, working with an attorney can be key to getting insurance companies to honor their policies. An attorney can also examine the details of individual accidents, and the limits of all relevant plans to ensure that fault is assigned fairly and that the responsible entities are held accountable.