INSURANCE CORNER: Uninsured/underinsured auto coverage often misunderstood

For many people, buying insurance is an arduous process they find distasteful. Maybe that is why so many people just lock onto a company and do not shop.

Understanding the policy language and coverage provisions is not something many people want to deal with. I can understand that, but being in this business so long I also know what you do not know can come back to bite you. Insurance is a product that protects your assets. One of the coverage provisions that is misunderstood by many people is the uninsured/underinsured coverage on an auto insurance policy.

Uninsured motorist bodily injury coverage protects you and the people in your car if you are hit and injured by a driver who does not have liability insurance. Liability coverage is mandatory in the state of Georgia but not in Florida. But some drivers let their policy lapse due to the inability to pay the premium. Uninsured motorist property damage coverage protects your vehicle or other property if it is damaged by that same uninsured driver. This coverage is subject to a deductible, typically $250, just like your collision coverage.

Underinsured motorist liability coverage protects you and your passengers if you are injured in an accident caused by another driver and the cost of treating your injuries exceeds the other party's liability coverage. It comes in two flavors: traditional -- also known as difference coverage -- or add-on coverage.

The best way to explain this is using an example. If you have underinsured motorist coverage of $100,000/$300,000 and are hit by someone who has the minimum limit of $25,000/$50,000, with difference coverage you have $75,000 per person and $250,000 for all injured parties over the other party's liability coverage, or $100,000/$300,000 in total. With add-on coverage you put your limits on top of the other parties' liability coverage, so for this example you would have up to $125,000 per person and $350,000 per occurrence.

Underinsured motorist property damage coverage works the same for your property. But your vehicle is a fixed cost to repair or replace. You can save a little money here by carrying a lower limit unless you are driving around in a $100,000 car or truck.

This coverage is not required in Georgia and you can elect not to carry it. Since add-on coverage gives you more coverage, it costs more than difference coverage.

What you need to decide with your agent is which coverage works best for you. Insurance is not cheap, but you need to make an effort to get the coverage you need at the lowest possible cost, taking into consideration a company's claims handling and financial stability.

Dave Pushman is the former regional vice president of Geico in Macon and is now an independent insurance agent with Tidwell and Hilburn Insurance. He can be reached at davep@th-ins.com.

This story was originally published November 3, 2015 at 10:27 PM with the headline "INSURANCE CORNER: Uninsured/underinsured auto coverage often misunderstood ."