why is there insurance against uninsured drivers?
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The purpose is to receive compensation if someone causes damages to you and can’t pay due to a lack of liability coverage.
It’s illegal to drive without liability coverage in most of the US, but people do it anyway.
Drivers who can not afford insurance usually can not afford to pay for damages they might cause. So if you get hit by an uninsured driver they might not be able to pay you. So you can rely on your insurance to get the money you need to repair the damages. Your insurance can then try to recover their loss from the uninsured driver.
If you’re in a crash and the other driver is at fault, it’s on them (or more generally, their insurance because that’s what it’s for) to pay for your damages. But if they don’t have insurance, you’d be out of luck.
So your own insurance company can cover you instead for that situation. But of course, they make you pay a bit more for this “feature”.
if your car gets totaled by an uninsured driver, who pays?
They don’t have insurance, so their insurance company won’t pay. The other driver probably doesn’t have any money, and even if they did a lawsuit could take months or years and cost you thousands of dollars to pursue. In the meantime you don’t have a car and can’t get to work.
So the compromise solution is that your insurance company pays you, and then they can sue the other driver, because the insurance company has resources and time to pursue a lawsuit that you do not
If you are to blame for an accident, your insurance is usually on the hook for damage to all the vehicles affected by it.
If you are hit by an uninsured driver who can’t afford to pay for the damages you’d be SOL without either your insurer being prepared to step up or having this additional insurance to protect you from that situation.
If I hit your car, my insurance pays for the damages. If it’s my fault, my team pays your team.
If you are at fault, your insurance pays me.
If I’m at fault, and I have comprehensive insurance, my insurance pays for you and for me. If I just have liability, then you get paid, and I am on my own to repair my car.
If I am not insured, and I am at fault, you are at risk of getting zero, unless you have the right coverage that covers this situation. That’s where things like uninsured motorist insurance comes in.
Yeah a friend got hit by a kid who didn’t have a license, so technically uninsured. But yeah people do it more than you’d think.
Uninsured is often bundled with Underinsured coverage. This basically protects you if the person at fault doesn’t have the money to pay or the insurance. In AZ where I live the minimum coverage is like $30k so you can imagine how someone with minimum coverage will not be able to cover everyone in a multi car accident. While you can go after their assets people with that coverage often don’t have assets.
Uninsured coverage also usually includes ***underinsured*** coverage. Because state minimum liability coverage is often laughably (sadly) low. Like $10k or $25k.
So you get in an accident, other party is at fault, and have a $50k hospital bill + your car. If they have $25k of coverage, that’s what you get. Sure, you can sue them for the difference, but you can’t get money from someone who doesn’t have any. Underinsured picks up the difference between their coverage and what you are covered for.
In Georgia, specifically, there’s even two “flavors” of underinsured. There’s add-on underinsured (if you have $100k of add-on underinsured and they have $25k, you are covered up to $100k + $25k = $125k) and the cheaper reduced underinsured (if you have $100k of reduced underinsured and they have $25k, your $100k is ‘reduced’ to $75k for a total of $25k + $75k = $100k in coverage–in other words, your reduced underinsured limit is the total paid out through a combination of theirs and yours).
‘Why is there insurance against something that could completely ruin my life and leave me in financial shambles’
Essentially what you just asked.
Just your friendly reminder: if you get in an accident call THE OTHER PERSONS INSURANCE NOT YOURS
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