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Understanding your car insurance policy

What is uninsured and underinsured motorist coverage
On Behalf of Hoy Law
April 21, 2023

Car insurance is an important part of driving a car. While you may know you need it, often, the terms are complex and challenging to understand.

Here’s what you should know about some of the essential terms and how your auto policy works.

Learning the terms

The crucial part of understanding your policy is knowing the terms and when they apply. Some of the most important terms on your policy include:

  • Bodily injury liability. When you are liable for an accident, this coverage protects you against claims made by others injured in the accident.
  • Property damage liability. If you damage someone’s property or vehicle in an accident, this insurance will protect against these claims.
  • Amount of liability coverage. Typically, the amount of liability coverage is expressed in a set of three numbers, such as 25/50/25. This example means the policy will pay up to $25,000 for one person injured in the accident, up to $50,000 for all people injured in the accident, and up to $25,000 for property damage.

Uninsured and underinsured motorist coverage (UM/UMI). While everyone is supposed to have adequate insurance, not everyone does. These types of insurance will protect you for injuries (not property damage) when the liable party does not have insurance or does not have enough insurance to cover your injuries. In the case of an underinsured motorist, your insurance would start where theirs ends, less the amount of their coverage.

These are the minimum types of coverage you need to have in South Dakota. Additionally, other types of coverage can protect you, such as:

  • Medical payments coverage (MedPay). This type of coverage protects you regardless of who is at fault for the accident. It covers medical bills for you and your passengers.
  • Collision coverage. This type of insurance covers damage to your vehicle after an accident, regardless of fault.
  • Comprehensive coverage. There are also instances where there is damage to your vehicle without a collision. Comprehensive coverage protects your car if there is damage from incidents like hail, vandalism or theft.

While there is no law requiring these additional types of coverage, there are some lease and loan agreements that may require them.

What is uninsured and underinsured motorist coverage
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