Part Two – Liability Coverage / Uninsured & Underinsured Coverages
This is a multi-part series that will talk about auto insurance: what it is, what it covers and how rates are configured.
As we talked about in part one, if you own and operate a vehicle in the U.S. you are required to carry personal auto insurance. If you own and operate a vehicle in North Carolina, you are required to carry liability coverage and uninsured motorists’ coverage.
So, what is liability coverage??? Liability coverage may look something like 50/100/50 on your auto policy. These are often referred to as split limits. Let’s break this down so we can know what those numbers mean.
If you are involved in an accident where you have been found lawfully at-fault, your insurance will pay bodily injury up to a maximum amount of:
$50,000 per person / $100,000 per accident for bodily injury
And they will pay up to:
$50,000 for property damage
Your policy may have numbers other than the 50/100/50, but just remember you will still break it down the same way.
Now we know that the first two numbers represent bodily injury coverage and the last number represents property damage.
Uninsured Motorists (UM) Coverage will provide protection when an uninsured driver, who is at-fault, injures you or another covered individual. It also provides property damage coverage.
Underinsured Motorists (UIM) Coverage will provide protection when an underinsured driver, who is at fault, causes injury to you or another covered individual. An underinsured driver is one whose limits of liability are less than your UIM limits, and not enough to cover the losses of the people the underinsured driver injures in an at-fault accident. UIM coverage does not provide protection against property damage. The UIM coverage will pay a maximum of the difference between the other driver’s Liability limits and your UIM limits.