“Uninsured” Vs. “Underinsured” Coverage

Understanding the difference between “Uninsured” and “Underinsured’ Coverage in Your Auto Policy

The state of Wisconsin requires that drivers carry uninsured motorist coverage. However, it’s optional to carry underinsured coverage. So what’s the difference?  Let’s say you’re driving around as a responsible driver with liability limits of $250,000 per person and $500,000 per accident. If you hit someone and injure them, your coverage provides up to a quarter of a million dollars for one individual and up to half a million in total for everyone injured.


Now, say you get into an accident where the other party hits you; it’s their fault so they’re going to go to their insurance company who is then going to contact you. Their insurance company is going to pay for your injuries and any other injured people. If the other driver doesn’t have any insurance, that is considered uninsured. In that case, your uninsured policy kicks in and says “OK, we’ve got you from dollar one up to $250,000 and a half a million for everybody in total. It pays until it maxes out and then it’s done.” This type of coverage is required in the state of Wisconsin. Underinsured motorist coverage, on the other hand, is not.


So, if it’s not required, why would you want underinsured coverage? Consider the following example; you’re hit and it’s the other driver’s fault. You’ve got significant injuries and or so do your passengers. Unfortunately, you learn from speaking with the other person’s insurance company, they only bought the state minimum limit of $25,000 per person and $50,000 total for everybody’s injuries. With that kind of policy, if you land in a hospital, in a coma, or your kids and family are seriously injured, that $25,000 per person and $50,000 total is going to be gone in a heartbeat. Chances are those amounts won’t actually cover the necessary costs for your care. In that case, if you have underinsured coverage, it basically says “all right, from $25,001 we’ll go now to a $250,000.” So you can now collect up to that amount for an individual and potentially up to $500,000 for all injured parties, depending on your policy.


Unfortunately, there are more and more people driving around with little or no insurance at all and while health insurance may step in and cover your medical bills, it doesn’t cover your potential loss of income or pain and suffering.  Uninsured and Underinsured coverage can be very inexpensive for higher limits and if you really want to protect yourself, you can even add it to your umbrella policy.


Long story short, if you drive a car and are insured, good for you! But, understanding what your policy actually covers is VERY important. For some of you, having that extra peace of mind of underinsured coverage will far outweigh an extra cost to your premium.  Have questions? Give us a call at (262) 784-0644 and we will be sure to help you better understand your policy as well as discuss the importance of having uninsured and underinsured coverage.