HOW TO GET THE MOST PROTECTION FROM YOUR AUTO INSURANCE POLICY
When someone asks for the amount of an auto insurance policy, the first numbers that come to mind are the “bodily injury limits.” When we say a policy is (for example) “a 100/300” policy, what we mean is that our insurer will pay a maximum of $100,000 to another person who we injure in a motor vehicle accident, or a maximum of $300,000 to everyone who we injure in a single accident if there is more than one person involved.
Of course, your responsibility is not limited to the insurance you carry – if the other person’s injuries are worth more than your insurance, they can sue you personally and try to collect from your personal assets. So it’s always best to carry the most insurance you can afford.
More importantly, the “bodily injury limits” are the amount of insurance you carry to protect other drivers – but your auto policy also has a provision that protects you in case the other driver has less insurance than you, or no insurance at all. This is called the “underinsured motorist” (SUM) provision, and your insurer is required to offer you coverage up to the amount of your bodily injury limits.
This is how it works: Let’s say you have a 100/300 policy that also has 100/300 SUM coverage. If you’re involved in an accident with an uninsured driver, your insurance company will pay you up to $100,000. If you’re involved in an accident with a driver who has a 25/50 policy and you recover the full $25,000 from the other driver, you can recover up to $75,000 from your own insurer.