The Impact of Uninsured Motorists on Your Insurance Premiums
No driver wants to find themselves involved in a debilitating accident while driving on the road, but car accidents are sadly frequent. The issue of a wreck is only compounded if you find out that the other driver involved is uninsured.
While insurance to some degree is required across the United States, some drivers still choose to break the law. In fact, 1 in 8 drivers are uninsured in some states going to show how prevalent this issue actually is. When hit by an uninsured driver, it can change the entire aftermath of a car accident. Learn everything you need to know if hit by an uninsured driver and how it can impact your premiums.
Understanding the Role of Uninsured Motorist Coverage
First and foremost, it’s important to look at what uninsured motorist coverage is and why you should consider adding it to your insurance policy. Uninsured motorist coverage is a specialty type of insurance that covers the exact situation where you are hit by a driver who is uninsured.
Normally, when another driver is at fault for an accident their insurance covers the costs of repairs to your vehicle. When they are uninsured, though, getting adequate compensation can be a challenge. Having uninsured motorist coverage on your policy means that your own insurance will step in to fill in coverage gaps.
It’s also worth noting that uninsured and underinsured coverage are not the same. Underinsured coverage kicks in when you collide with a driver who simply doesn’t have enough coverage to cover all the damages to your vehicle, but they do actually have insurance. This is the primary difference between the two types of coverage, though they are often sold as a bundle.
How Accidents with Uninsured Drivers Affect Your Premiums
Unfortunately, getting into an accident with an uninsured driver can affect your own premiums. Auto insurance premiums are typically using a variety of factors including driving history, vehicle type, the location you live, and your history of claims.
While an insurance company can’t legally increase your premiums simply because you filed an uninsured motorist claim, the nature of the accident and the fact that your insurance company needed to payout more can lead to an increase.
This is because the insurance company algorithm may deem you at a higher risk for accidents in the future since you’ve submitted claims in the past.
Beyond immediate increases in premiums, any future accidents could have a compounding affect that lead to even higher premiums later on.
The Role of Fault and How It Impacts Your Insurance
One of the biggest factors for who pays for damages in an accident is who was at fault for the accident and to what percentage. Generally, the at-fault driver will pay for most of the damage and be slapped with higher premium rates.
However, if you collide with a driver who is uninsured and they were clearly at-fault, then there is no insurance to cover the damage. Unfortunately, though, under comparative negligence laws, if you are found to be partially at-fault for the accident then your reward amount will be reduced by that percentage.
This means that even if you have uninsured motorist coverage the damage to your vehicle may not be covered in full by your own insurance either.
This can leave you on the hook and forced to make payments out of pocket for damages.
What Happens if You Don’t Have Uninsured Motorist Coverage?
Uninsured motorist coverage is not one of the legally required types of insurance to carry in most states around the country. This means that you may not have it on your policy currently. If you happen to be involved in an accident with a driver who is uninsured, your insurance company may deny a claim you make and refuse to cover some or all damage.
This lack of coverage can include your vehicle damage, medical expenses, and general damages as well. For those on a tight budget, covering these expenses out of pocket can be devastating.
To counteract this if you don’t want to purchase uninsured motorist coverage, you can always increase your coverage limits on your comprehensive or collision coverage options, but it might end up being cheaper to just add on the new policy.
On top of the financial expense associated with covering the out of pocket costs, your other financial standings, including your credit, could be impacted if you can’t make payments.
How Insurance Providers Handle Uninsured Motorist Claims
In the event you do collide with a driver who isn’t covered, insurance companies have a special way to handle the case. If you were at-fault for the accident, none of it will apply anyways as your premiums will be raised and your insurance company will be forced to cover the damage to the other vehicle.
However, if you were not at-fault and don’t have coverage your insurance may have issues processing the claim which can leave you paying out of pocket. If you have coverage for uninsured drivers then the insurance claims process will run as normally expected.
Be aware that if you have repetitive rate increase or multiple claims on your insurance then you may have a non-renewal of you policy.
Be proactive to protect yourself and your wallet
Being involved in an accident with an uninsured driver is a frustrating experience that can leave you reeling. Rather than being forced to deal with the financial aftermath of this incident, consider adding uninsured motorist coverage to your plan. This will help provide you with financial coverage for property damage and medical expenses while protecting your premiums.
Be proactive when shopping for insurance coverage to ensure that the rates and policies you’re considering align with your needs. When in doubt, take some time to review your current policy and consult an insurance agent for advice on whether or not adding uninsured motorist coverage is right for you.
