Uninsured motorist coverage is another type of coverage available as part of a personal auto policy. Uninsured motorist coverage allows the insured to recover damages from his or her own carrier from accidents in which the other driver is at fault and either has no coverage, whose carrier refuses to cover losses, is insolvent or from hit and run drivers. It is important to understand that (1) the other driver must be at fault, and (2) the insured’s own carrier covers the cost of damages.
Underinsured motorist coverage is similar to uninsured motorist coverage in that it also allows the insured to recover damages from his or her own carrier from accidents in which the other driver is at fault. The difference is that this coverage comes into play when the other (at-fault) driver’s liability covers is insufficient to cover damages. The insured’s carrier will pick-up the difference up to the specified coverage limit.
In some states, uninsured and underinsured motorist coverages are compulsory (mandatory), though compulsory uninsured motorist coverage is much more common than compulsory underinsured motorist coverage.