What Is The Difference Between Uninsured Motorist Coverage And Underinsured Motorist Coverage?

Steven Kluender

There are important differences between uninsured and underinsured motorist coverage. When you purchase an auto insurance policy in Wisconsin, you automatically receive uninsured motorist coverage since it is mandated by law in Wisconsin. This coverage protects you or your family members if you are injured as the result of the negligent operation of a motor vehicle by a driver who does not have liability insurance coverage. Wisconsin law does not require drivers to carry insurance coverage. Therefore, the possibility always exists that you or a family member may be injured as a result of the negligent operation of a motor vehicle by an uninsured motorist.

If you are injured as the result of the negligence of an uninsured motorist, you have some obligations to your own insurance company. Since your insurer issued this coverage, you are required to fully cooperate with it. Such cooperation may involve giving a tape recorded or signed statement, allowing access to your medical records, and being examined by a doctor chosen by the insurer. Do not fail to cooperate with your insurer under these circumstances, as you may find that it may turn around and deny you uninsured motorist coverage because you did not cooperate.

From this point forward, uninsured motorist cases are handled just as if the other motorist were insured. In other words, you or your attorney would proceed to negotiate or discuss a settlement with your own insurance company just as if that insurance company were insuring the uninsured motorist. Because there is an adverse relationship here, we always advise those injured by uninsured motorists to retain an attorney. It is almost impossible to reopen a settlement at a later date even if your medical condition should substantially worsen.

Underinsured motorist coverage, on the other hand, is not mandatory, but your insurance company must offer this coverage in limits of at least $50,000 per person and $100,000 per accident when you initially purchase the policy. You should always request underinsured motorist coverage when you are looking into obtaining or renewing an auto policy. Underinsured motorist coverage is available to you or a family member if you are injured as the result of the negligent operation of a motor vehicle by another motorist who has only minimal liability coverage or whose coverage limits are less than yours.

For example, assume you have sustained injuries in a motor vehicle accident caused by another driver who has liability insurance policy limits of $50,000. Assume also that your injuries have a value of $100,000. Clearly, this is an underinsured motorist situation since the other driver’s liability limits are insufficient to compensate you for your injuries. If you have underinsured motorist coverage, you may be able to avail yourself of such coverage.

However, under the terms of most policies, if you have only $50,000 in underinsured motorist limits, your limits are the same as the other driver’s limits in our example. Therefore when compared to you, the other driver is not underinsured. Consequently, it always makes sense to purchase underinsured motorist coverage in as great an amount as you can afford to protect yourself and your family. This coverage is affordable and adds little to the premium paid for liability coverage.