Why Are Underinsured Drivers A Problem?
Every state in America except New Hampshire requires its drivers to purchase car insurance in order to legally own and operate a vehicle. States also mandate a baseline of how much an insurance plan must payout if an accident ever happens. Most states, including Illinois, have a similar minimum, known in the industry as "25/50". This means that a car insurance policy must pay:
- Up to $25,000 per person in an accident for bodily injuries
- Up to $50,000 per accident for all bodily injuries (e.g. if more than one person is injured in an accident)
- Up to $25,000 per accident for property damage (i.e. damage to a car or other personal property like a bicycle, mailbox, or possessions in a trunk)
What this means is if you were to get in an accident with a driver who only had state minimum coverage, their insurance company would only pay you $25,000 for your medical damages and nothing more. With medical costs rapidly increasing, this award could very easily be taken up by one trip to the emergency room or a few days in the hospital. This now puts the victim of an accident on the hook to pay for further medical costs, rehab, physical therapy, and any other additional injury damages. When you cannot work due to an accident and thus lose out on wages, this problem is magnified.
Many Illinois drivers avoid this situation one of two ways: they either purchase insurance with liability limits higher than the state minimum, or add underinsured motorist coverage onto their own plan. This coverage allows a driver to make a "first-party" claim against their own insurance to help cover the gap between the state minimum coverage limits and the actual cost of their accident. . Illinois state law requires drivers to have uninsured motorist coverage equal to their policy's bodily injury liability. In addition, this uninsured motorist coverage can also be used when you get into an accident with an underinsured motorist: hence, this coverage is known as "UM/UIM" coverage by insurance agents and experts. Read the coverage declarations page of your policy to find out exactly how much UM/UIM coverage your specific insurance plan has.