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How Does Being Underinsured Affect Drivers?

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The Dangers of Being Underinsured

The term “underinsured” suggests vulnerability for drivers in the event of a traffic accident, resulting in injury or financial loss. There are different ways in which an individual can be underinsured. While auto insurance plans are customizable to fit individual needs, it’s important to consider how being underinsured can negatively affect you. Here’s a look at what underinsurance can mean to drivers.

Uninsured vs. Underinsured

The differences between uninsured and underinsured are fairly obvious. An uninsured driver simply carries no insurance policy, while an underinsured driver does not have enough coverage to fully protect themselves in the event of an accident. Regardless, either scenario can result in financial trouble for a driver if they get involved in an accident.

One way a driver involved in a claim can be considered underinsured, is if they have coverage but the limits aren’t high enough to pay for all of the damage. Often times, drivers try to save money on monthly car insurance premiums by choosing the bare minimum coverage that meets state requirements. This can leave drivers involved in an auto accident without a car and burdensome out-of-pocket expenses. The goal of every driver should be to carry coverage that both fits their budget and protects them financially.

Paying Out of Pocket for an Accident

If you collide with another vehicle and your insurance policy does not cover all of the damages, it can lead to a personal injury lawsuit. Let’s say $75,000 worth of damage was done in an auto-collision but your coverage only pays up to $50,000, this means you could be liable for the remaining $25,000. In a worst-case scenario, drivers are susceptible to losing valuable assets if the damage caused far exceeds the coverage limits.

Common Out-of-Pocket expenses in the event the driver is underinsured:

  • Accidents that accompany extremely high medical bills
  • Victim has to miss a substantial amount of work.
  • Massive damages, such as a totaled vehicle and property damage.
  • Accidents that result in multiple injuries

Nobody wants to get stuck with a huge bill, especially when paying a little more in your monthly premium can save thousands in the event of an accident. Adding higher limits to your liability coverage can prevent a financial disaster in the long run. Drivers should contact their insurance agent to verify all coverage liabilities and options.

How to Avoid Underinsurance

While no one wants to imagine getting into an auto accident, it’s wise to plan for the unexpected. An accident that causes multiple injuries can lead to financial devastation if coverage limits aren’t high enough. Your insurance agent can point out premium factors that you might not have previously considered. For example, drivers often overlook the importance of coverage for others involved in an accident like passengers, pedestrians and other drivers.

The most effective way to protect yourself from winding up in a financial dilemma as a result of a car crash, is to talk with your insurance agency. From this, drivers can determine if their policy is up-to-date and provides adequate coverage to fit their needs and budget.

Carrying the right amount of auto insurance can make a big difference if you cause an accident that impacts another driver. When looking for your next policy, turn to the Lone Star locals at Reata Insurance Group. From San Antonio to Beaumont, Amarillo to Houston, we serve Texas motorists with the quality car insurance they need and deserve.

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