Do you need uninsured motorist coverage?
The last thing people think they need is more insurance. Today, it seems like people can insure everything for a price, and oftentimes they do. One of the most uncommonly known insurance coverages is uninsured motorist coverage.
What is uninsured motorist coverage?
Uninsured motorist coverage does exactly what its name implies: it covers you in the event you get into an accident with someone who doesn’t have insurance. The coverage can also apply in cases where the other motorist doesn’t have enough insurance coverage to pay for all of your damage (this is also referred to as underinsured motorist coverage).
Uninsured motorist coverage is mandatory in certain provinces. It also covers not only you, but also your family, as passengers and as pedestrians or cyclists.
Does uninsured motorist coverage make sense for you?
Unless you’re in a province which requires it, no one needs additional insurance coverage. While the cost may be negligible, it is possible to self-insure by buffing up your savings account in the event of an accident with an uninsured motorist. For people who are a bit more conservative and enjoy the thought of being covered no matter what, having uninsured motorist coverage is a small price to pay for peace of mind. It’s especially important to consider if your emergency savings are enough to cover a lengthy hospital stay or even to pay for a new vehicle.
In the case of a stolen vehicle or hit and run accident, uninsured motorist coverage will also come in handy. In these situations, it becomes impractical or impossible to claim damages from the owner of the car so being able to collect money from your insurance company is a huge help.
Other things you need to know about uninsured motorist coverage
Uninsured motorist coverage is also a great idea if you get into an accident with a person who is underinsured. Say for example that you have damages of $1 million but the motorist is only insured for $500,000. In this case, your uninsured motorist coverage will pay the balance of the costs.
However, uninsured motorist coverage isn’t as simple as you might think. In provinces where you can claim insurance damages from a third-party, uninsured motorist coverage only pays the difference between what the third-party paid and what your damages are.
Keep in mind that uninsured motorist coverage only applies if the other driver was responsible for the accident. Jumping in front of a car, insured or uninsured, is a dumb move. Doing it because you have uninsured motorist coverage is even dumber; your insurance company won’t cover damages that were your own fault.
Finally, while the idea of uninsured motorist coverage is a great idea for financially conservative people worried about getting into an accident with someone without insurance, the coverage comes with many conditions. Make sure you understand them before you buy a policy.