Understanding “Underinsurance” and “Uninsured” in Motor Vehicle Insurance Policies

Almost every state in the nation requires its citizens to have automobile insurance. New York is no different — it requires drivers to carry a minimum of $25,000 in liability coverage. Unfortunately, many people ignore this requirement and drive without coverage, or only buy the bare minimum of $25,000. Because almost any physical injury caused by an automobile accident in today’s day and age will be valued at substantially over $25,000, this means that a lot of people who are injured in a motor vehicle accident are not going to be able to recover enough to be compensated for their injuries.

In order to remedy this issue, the legislature has mandated that insurance companies in New York offer Uninsured and Underinsured Motorist Coverage to their policyholders.

The “Uninsured” Coverage provision of your policy kicks in when the vehicle that injured you does not have any liability insurance, or in a hit-and-run accident situation, where the at-fault driver cannot be found or identified.

The “Underinsured” Motorist Coverage covers you, the policyholder, when the other driver does not have enough insurance coverage to pay for all the damage caused. It is insurance held by you, the injured party, that kicks in when the at-fault party does not have enough insurance to fully compensate you for the injuries you suffered.

The law governing the use of uninsured and underinsured insurance policies is complex because none of the insurance companies involved really want to dip into their coffers to pay out, so they are always looking for ways to shift the fault in the case to a different policyholder, or to deny coverage because of a technicality. There are also timing and notice issues that need to be considered.

The best thing you can do if you find yourself in a situation like this is to hire an attorney who has dealt with this type of situation before.