Uninsured Motorist Property Damage Coverage
If I purchase collision insurance on all my vehicles, why do I need to purchase uninsured motorist property damage coverage? That’s an excellent question, and one that is frequently asked by our customers. Uninsured motorist property damage coverage is expensive, especially when you have several vehicles covered on your personal auto policy.
First, let’s take a look at your collision coverage to see exactly what’s covered there. Collision insurance covers direct and accidental loss to your vehicle when it collides with another vehicle or object, or when the vehicle overturns without involvement with another vehicle or object. This coverage applies no matter who is at fault.
A total loss on your vehicle is generally going to be paid on a market value basis, meaning the price a willing purchaser would pay for the vehicle prior to the loss. Damage that doesn’t result in a total loss is repaired or replaced with parts of like kind and quality. If the damage to the vehicle can be repaired, your vehicle may be worth less after the repairs are made than it was worth prior to the accident. This is called “diminished value” and your collision insurance doesn’t cover it.
The expense to rent another vehicle while yours is in the shop for repair is not covered by collision insurance, although many policies cover this expense with a separate coverage. The typical limit for this coverage, however, is only $20 per day for up to 30 days. Electronic equipment installed in the vehicle is covered, but some policies only pay up to $1,000 for such equipment. Collision insurance does not cover any personal items in or on your vehicle that might be damaged, such as a laptop computer. And finally, some policies do not cover or limit the amount you can be paid for custom furnishings or equipment in or on your vehicle.
Uninsured motorist coverage is designed to put your policy in the place of another person’s liability insurance when that person has no insurance, or when the limits of liability carried by that person are insufficient to cover the amount of your loss. In addition, it pays if you are hit by a vehicle that drives away from the scene of the accident and can’t be identified. Just from the standpoint of the chance of such a loss occurring, uninsured motorist coverage is an important part of your protection, because it is estimated that almost 25 percent of Texas drivers don’t carry auto liability insurance. Many persons who do purchase liability insurance only carry the minimum limits required by state law. For property damage liability, the required amount is now $25,000.
Uninsured motorist property damage coverage pays for damage to your vehicle caused by an uninsured, underinsured or hit-and-run motorist. It pays up to the limit you have purchased, so obviously you want to be sure to carry a limit that will cover a total loss of your vehicle. But you should carry a higher limit for some of the reasons listed below.
Here are the top reasons you should purchase uninsured motorist property damage coverage:
1. There is no daily or total limit on what you can be paid to rent another vehicle while your vehicle is being repaired. If you own a premium automobile, you will be paid what it costs to rent a premium automobile. 2. There is no limit on what you can be paid for damage to electronic equipment installed in your vehicle or to custom furnishings or equipment in or on your vehicle. 3. The coverage pays for damage to personal items in or on your vehicle. 4. The coverage may pay for the “diminished value” of your vehicle after repairs are made.
For these reasons and more, we recommend that you purchase uninsured motorist property damage coverage even when you carry collision insurance on all your vehicles. Contact your agent if you have any questions about this or any other aspect of your personal auto insurance.