Driving a business vehicle exposes you, the car and the associated business to financial loss risks. In some cases, you might become the victim of another driver's mistakes. You thus might have a chance to file your damage claim on their auto liability insurance. However, what happens if that person's liability insurance doesn't cover your losses? What if they don't have liability insurance at all?
If you cannot use someone's liability coverage, your commercial auto policy might help. If you have uninsured/underinsured protection, then it might become your saving grace.
Understanding Uninsured/Underinsured Car Insurance
At-fault insurance states usually place the burden for damage costs on an at-fault party's liability insurance. In other words, if you cause a wreck, then you will often have to pay for the other driver's injuries or vehicle damage. Likewise, if another driver causes you harm, then they will have to pay for your losses, in most cases.
Yet, what happens if the other driver lacks the appropriate liability insurance? That might be a job for uninsured/underinsured liability coverage. It can step in if another driver's liability coverage can't help you.
- Underinsured Coverage pays you if a driver doesn't have enough liability coverage for all your losses. This coverage can pay for some or all the rest of your losses.
- Uninsured Coverage pays you if a driver doesn't have liability insurance at all. In other words, if you have no liability coverage to turn to, this policy might help.
Some states require drivers to carry uninsured coverage. Missouri is one of these states. Its required coverage start at:
- $25,000 bodily injury coverage per person
- $50,000 bodily injury coverage per accident
Coverage will help pay for your injuries if the other driver doesn't have bodily injury liability coverage. It comes on your own policy. Often, you will not see a rate increase if you must make an uninsured/underinsured claim. Many insurers will not punish you for fault in these cases. Some might though, so talk to your Auto Insurance Discounters agent.
How Coverage Works
Most states (including Missouri) require all drivers to carry auto liability insurance. It will protect both policyholders and other drivers from significant losses. Yet, although the law requires coverage, that doesn't mean all drivers will have the right policies.
- States usually require drivers to carry relatively low, minimum levels of liability insurance. So, if a wreck causes significant damage costs, a low liability policy might not pay the full cost of another person's losses. In this situation, if you are the victim, then you might still have the risk of facing out-of-pocket costs. For example, another person's policy might pay only $25,000 for your injuries. However, you might have $50,000 in total medical costs. Therefore, you might face $25,000 in out-of-pocket costs.
- It might be against the law, but some drivers do not drive with insurance at all. Statistics from 2017 show that about 14 percent of Missouri drivers drive uninsured. If an uninsured party causes your damage, you might have no recourse to pursue a liability claim.
- Sometimes, you cannot even determine on whose liability coverage to file your claim. For example, if you become the victim of a hit-and-run, the offending driver might speed away. So, you might not even be able to make a liability claim unless you identify the offender.
It is in cases like these that uninsured/underinsured coverage might come in handy.
- In underinsured claims, the other driver's liability coverage will pay up to its maximum limits. Then, your underinsured coverage can pay the rest of the claim, up to its own maximums.
- If the driver has no insurance, uninsured protection will pay for damage up to its maximum limits.
Do I Need Coverage?
If you don't have commercial auto uninsured/underinsured coverage, think about what you might lose if you can't file a claim. You already won't be able to get full (if any) coverage from a third party's liability policy. You might not be able to cover the damage costs out of your own pocket. Therefore, your own solvency might come under threat. Can your business withstand those threats?
When it comes time to get your Missouri policy, pause to think. In most cases, you need more uninsured/underinsured coverage than those required by law.
- Missouri's minimum limits of $25,000 for bodily injuries might not cover all the losses you need to claim. Consider asking your agent to increase your limits.
- You have no requirement to carry uninsured/underinsured property damage coverage. But many insurers offer coverage for property damage. If you sustain vehicle damage, for example, then you might find this coverage beneficial.
- Keep in mind, some insurers define uninsured risks and underinsured risks separately. Ask your agent to make sure you have both options.
We can't understate the importance of having both uninsured and underinsured motorist coverage on your commercial auto insurance. Our agents can help you determine the coverage and limits from which you can most benefit.