There are two broad types of coverage which can be included in a car insurance policy. Coverage is available to protect you from financial loss if you’re involved in an accident and it’s your fault. Coverage is also available when you’re involved in an accident and it’s not your fault. The first is required by Texas state law, the second is strictly an option.
Let’s assume you’re stopped at a traffic signal and the light turns green. You let your foot off the brake to proceed through the intersection and you’re hit by a car that was trying to make the signal before it turned “dark red.” The person who hit you is at fault; they ran a red light and struck your car.
If the person who hit you didn’t have car insurance, then uninsured/under insured motorist coverage, also referred to as UM/UIM, will pay to repair your car or pay for the depreciated value of your car if it’s totaled.
The other “half” of uninsured motorist coverage is under insured motorist coverage. This coverage kicks in when the person who hit you doesn’t carry enough car insurance coverage to pay for your totaled vehicle or for repairing your vehicle.
Let’s assume you’re driving a brand new car. The average new car cost is just over $32,000, and if you’re driving a fully loaded Honda Accord, Toyota Camry, or Ford Taurus they cost a little more than that. Assuming the person who hit you is carrying the Texas state minimum level of 30,000/60,000/25,000 they may not have enough coverage to pay for the totaled value of your vehicle.
If you’re driving a car worth $40,000 or more, such as a Lexus, Infiniti, Mercedes or King Ranch pickup, they may not have enough coverage to pay for repairing your car or truck. As long as you have uninsured/under insured motorist coverage, then you’ll be covered.
In addition to the property damage portion we’ve outlined on UM/UIM, there is a second component to this coverage, medical coverage. UM/UIM includes medical care for you and anyone in your car up to the limits of your policy. When you consider many people have health insurance plans with a high deductible ($2,500, $5,000, or higher) or a co-pay of 10% to 30% this coverage becomes very helpful in keeping your out of pocket medical expenses low.
I recommend uninsured/under insured coverage to anyone with a new car. I also believe it’s important for people who’ve paid off their car and want liability coverage. Having it provides for repairs or a down payment on a new or newer car if your involved in such an accident. I think it’s also important to have because of the additional medical coverage. An extra benefit for having UM/UIM is the property damage deductible is lowered to $250 instead of a typical deductible of $500 or $1,000.
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