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Understanding whether you need uninsured motorist coverage

Colorado is one of several states that doesn't require you to carry uninsured or underinsured motorist coverage on your auto insurance policy. At a time when many people are trying to cut costs across the board, it might seem like a good idea to decline coverage that is optional. Before you pass on this coverage, though, make sure you understand what it is and whether you really need it.

The coverage is actually two types of coverage. Depending on your provider, you might be able to opt for one type, both types or no extra coverage. Uninsured motorist, or UM, coverage kicks in if you are involved in an accident and the person who is at fault has no insurance. If the driver did have insurance, their policy would be the primary payer for your damages. If you have UM coverage, then your insurance should pay in place of the insurance the other driver should have been carrying. The payment you receive under a UM plan is determined by your policy limits.

UIM coverage is slightly different. It kicks in if you are involved in an accident and the at-fault driver is underinsured. That means they are not insured for enough to cover the bodily damage to your vehicle or any injuries to your person. In such a case, their insurance would cover first and then your insurance is supposed to fill in the difference up to your policy limits.

UM and UIM coverage is important for drivers because it helps protect you from scenarios where a driver doesn't carry enough coverage. Without UM or UIM, you could end up holding the bill for your vehicle damage and your medical needs. Even if you do have this coverage, it can be difficult to understand how to best seek appropriate compensation. A personal injury lawyer can help you understand where to seek compensation.

Source: Wallet Hub, "Uninsured/Underinsured Motorist Coverage: Do You Need It?," Karl Eisenhower, accessed Nov. 11, 2016

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