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Is Underinsured Motorist Coverage Worth It?     

December 26, 2018 |

Montana state law requires all insurance carriers to offer policyholders the option of purchasing uninsured and underinsured motorist coverage. Montana adheres to a fault-based system for car accidents, so a driver’s personal auto insurance policy may only apply to another driver’s damages if the policyholder causes an accident. However, when an uninsured or underinsured driver causes an accident, an injured driver will likely need to rely upon his or her personal auto insurance plan for recovery.

Typically, an accident in a fault-based state means the injured driver first files a claim against the at-fault driver’s insurance policy. If the at-fault driver’s policy contains sufficient coverage for the injured driver’s damages, then the issue typically ends there. However, if the injured driver’s damages exceed the at-fault driver’s coverage, or the at-fault driver does not have insurance, it can be very difficult to secure recovery for an accident without uninsured or underinsured motorist coverage, even with the help of a car accident lawyer on your side.

Benefits of Underinsured and Uninsured Motorist Coverage

Montana law requires a driver to decline underinsured or uninsured motorist coverage in writing at the time of purchasing an auto insurance policy. This is ultimately an individual choice, but it is vital for a driver to assess his or her level of personal risk and the chance of an accident with an uninsured or underinsured driver to decide whether to purchase this type of coverage.

According to the Insurance Information Institute, nearly 10% of all Montana drivers do not have auto insurance. This means if another driver causes an accident with your vehicle in Montana, there is a one in ten chance that the at-fault driver will not have adequate insurance to cover your damages. Uninsured and underinsured motorist coverage acts as a safety net in these situations.

Typically, if an at-fault driver does not have enough insurance to cover the cost of damages he or she caused in an accident, the injured driver’s next available option is to file a lawsuit against the at-fault driver. However, if the at-fault driver does not carry sufficient auto insurance, then he or she likely has limited financial resources, and pursuing a lawsuit may prove fruitless. Ultimately, underinsured and uninsured motorist coverage is better to have and not need than to need and not have.

Downsides to Purchasing Underinsured/Uninsured Motorist Coverage

Any insurance policy requires a premium payment, usually paid out in monthly installments, to maintain coverage. The more extensive the coverage a policy offers, the more expensive the premium. A minimum policy may seem attractive due to its low monthly premium, but a driver ultimately gets what he or she pays for and a minimum policy may not offer much after an accident.

It is up to every individual driver to find a healthy balance of coverage and affordability. If a driver is willing to run the risk of an uncovered accident to avoid paying higher monthly premiums, this is a personal choice. It is also possible to tailor an insurance policy to an individual driver’s unique needs. Drivers should not pay for coverage they do not need, but it can be difficult to determine which types of coverage are most valuable to an individual driver.

Some insurance companies offer risk assessment services and take various factors into account when quoting insurance premium rates to potential policyholders. Take the time to explore your available insurance options and try to get quotes from multiple carriers until you find a plan that works for you and offers the amount of coverage you think you need.

Drivers should also be aware of the available discounts. Many insurance carriers offer discounted premium rates for good driving records, military service, students, vehicles with advanced anti-theft and safety features, and hybrid vehicles. Many insurance carriers also offer multi-vehicle discounts for families and couples with multiple vehicles.