Sometimes, your business’s employee driver might not be at fault for vehicle accident. Therefore, in a perfect world, it is supposed to be the other involved driver’s auto liability insurance that pays for the damage to your commercial vehicles.
However, the fact of the matter is that this person might either have no liability insurance at all, or not enough of it to cover the full cost of the business’s losses. Under the circumstances, it might be better to turn to a component of your own commercial auto policy called uninsured/underinsured motorist coverage.
Understanding Uninsured/Underinsured Car Insurance
Most states use at-fault auto insurance systems, meaning that the person who is responsible for an accident has to pay for their own damage and the damage of other involved drivers. It is liability insurance that will help the at-fault driver cover these third-party costs.
So, if another driver were to cause an accident that damages your commercial vehicle, then they would have to pay for your losses. Their liability insurance would make the appropriate remittances to you to aid in your recovery.
Yet, what happens if the at-fault driver lacks the appropriate liability insurance? Some drivers might not have liability insurance, even though they might be required to by law. Others might have coverage that only offers a low settlement amount, which might not be adequate enough to pay for the cumulative costs of your losses.
In either situation, you might find your solution in your own commercial auto coverage, provided you have uninsured/underinsured motorist coverage as part of the plan.
- 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 from someone else, this benefit might help you cover your own losses.
When you file a claim on your un/underinsured motorist coverage, your insurer will account for the fact that the accident was not your fault, even though you have to file a claim against your own policy. As a result, you often will not see a rate increase the next time you renew your coverage.
How Coverage Works
All states have different laws regarding uninsured/underinsured motorist benefits. Some even require drivers to carry this coverage as part of their mandatory insurance benefits.
Nearly all uninsured/underinsured motorist policies include bodily injury coverage. Essentially, this benefit makes up for a deficit between what an at-fault party’s bodily injury liability coverage will pay and what an employee driver’s injury costs are. Therefore, it will enable the injured driver to still receive the appropriate financial assistance for the costs of their recovery.
Additionally, some un/under policies include property damage coverage, though this can vary from policy to policy. Uninsured/underinsured motorist property damage coverage pays for damage to your own commercial vehicle when the at-fault party’s insurance coverage will not be able to help you pay.
Why Do I Need This Coverage
The reason you need un/underinsured motorist coverage as part of your commercial auto insurance package should be fairly obvious. You can’t guarantee that another driver will have the appropriate liability insurance to compensate you if they are at fault for your losses. Still, though you can’t fix a lack of insurance on the part of someone else, you can still be prepared for any eventuality by maximizing your own commercial auto benefits.
Think of it this way: If another driver lacks liability insurance, and you don’t have uninsured/underinsured motorist coverage on your own commercial auto policy, then you are actually opening yourself up to the risk of having to pay for certain damage costs out of your own pocket. Ultimately, that’s a big cost that your business shouldn’t have to face on its own. Would you company even be able to withstand such a challenging issue?
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.
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