Categorized | Finance and Money

Interesting Facts You May Not Know About Your Uninsured Motorist Insurance

Posted on 28 March 2012


Whenever most people hear about uninsured motorist insurance, they have a vague idea what it means. How it works and when it can be used, however, is a different story entirely. Despite its somewhat intuitive nature, there are actually many interesting qualities about uninsured motorist you may not know.

One interesting fact about uninsured motorist is that it’s set up exactly like your liability insurance. That is, it has three parts; uninsured motorist bodily injury per person, bodily injury per accident, and property damage. Many states require drivers to carry uninsured motorist bodily injury, to mitigate potential lawsuits and damages caused by uninsured drivers.

Another interesting fact about uninsured motorist is that property damage coverage can be difficult to find. Many insurance companies don’t even offer it as an option. Most companies offer bodily injury, but not the property damage portion. Why is this?

There are many explanations to the above question, but the most credible explanation is that uninsured motorist property damage can lead the unethical situations. The very nature of uninsured motorist coverage repairs and replaces damage to the vehicle even if there is no witness to what happened (remember, uninsured motorist will cover hit-and-run situations).

Perhaps an example will best illustrate this. Suppose that John Doe has both collision coverage and uninsured motorist on his vehicle. In a parking lot, John Doe is careless and rear-ends a huge truck. The truck sustains no damage, but John’s hood is destroyed. With the coverage John has, he could potentially do two things:

  • File a claim with his collision coverage to get the damage repaired
  • Pretend his car was involved in a hit-and-run, where the truck backed into him. File a claim with his uninsured motorist coverage to get the damage repaired

The first difference between these two situations is that the former is legal and the latter is insurance fraud. But what else is different about how these two claims are filed? There are two distinct differences that would work in John’s favor if he fraudulently filed the claim:

  • The claim would have a lesser impact on his future insurance premiums, because collisions more adversely affect premiums than uninsured motorist claims
  • John wouldn’t have to pay his deductible (typically $500)if he filed the claim through uninsured motorist; he would through collision

As you can see, there are many situations where it is beneficial for insured drivers to fraudulently file the claim. Although people are inherently good, most insurance companies don’t offer uninsured motorist property damage so as not to even put their insured drivers in a potential situation to act fraudulently.

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