Many people don’t understand that uninsured and underinsured motorist liability insurance is insurance coverage for your medical bills and loss of wages when involved in an accident caused by an uninsured or underinsured driver. This is extremely valuable coverage to have, as it can be a fiscal and physical lifesaver when something bad happens. It’s also a good idea to add this coverage under your personal liability umbrella policy to be sure you have limits high enough to cover your medical costs if involved in an accident with an uninsured or underinsured driver. The highest priority is to be sure that you and your passengers are physically taken care of, but then, what about your car?
If you have an accident with an uninsured driver (and the uninsured driver is at-fault), who pays to fix your car? It won’t be your Uninsured Motorist insurance as it does not pay for the damage to your car. You can get coverage under your collision coverage for your car’s repair, but it will be subject to your policy’s deductible. If you do not have collision coverage (carrying liability only coverage), you will have to pay for your car out of your own pocket. The fact that someone else can destroy your car, and not have to pay for it, can be very frustrating and isn’t fair.
After paying your claim, your insurance company can try to subrogate against the uninsured driver to recover the cost to repair your car, as well as any other medical costs, loss of wages, etc. If they receive any money from the at-fault party, your deductible will be refunded first. However, most uninsured drivers are driving without insurance because of tough financial reasons, so recovering any money from them is unlikely. Insurance companies are aware of this as well, and will not spend a lot of money chasing the uninsured driver for subrogation.
Some states (not Wisconsin) have a coverage called uninsured motorist property damage (UMPD). This is an alternative to collision property damage coverage for your car when hit by an uninsured driver. Although UMPD coverage has some potential advantages (saving some collision deductible and a collision claim), it can add more premium to your insurance package, and ultimately doesn’t really add any more overall protection. Whether it’s UMPD coverage, collision coverage or out of your own pocket, you are most likely going to incur some costs to repair or replace your car if you are involved in an accident with an uninsured driver.