What is “Underinsured Motorist insurance”? It is motor vehicle accident and motorcycle accident insurance you need. The good news is that it is cheap coverage you can add to your policy today with a short phone call to your insurance company.

Kentucky and Indiana require every motorist to carry minimum “liability insurance” of $25,000 to cover the medical expenses, lost wages, future care, pain and suffering, and other damages sustained by a person they injure in a motor vehicle accident or motorcycle accident. What happens if you are the innocent victim in such an accident and your medical expenses, lost wages and pain and suffering should all add up to a settlement to you of $100,000? Or, $150,000? What if you or a loved one suffer a severe injury? What if your medical expenses alone are $200,000?

If you are lucky or can afford it, you have health insurance which may pay some or all of your medical expenses (subject to a right of reimbursement from your settlement in many cases).  What if you cannot afford health insurance right now? What if your employer does not provide it?

This is where “underinsured motorist coverage” comes into play in a Kentucky motor vehicle accident claim, Kentucky motorcycle accident claim, Indiana motor vehicle accident claim or Indiana motorcycle accident claim.

“Underinsured motorist coverage” provides compensation to you under your own motor vehicle insurance policy to cover the difference between what your actual damages are and what the at-fault driver's liability insurance is.  For instance, if your medical expenses, lost wages and pain and suffering add up to $100,000, but the at-fault driver only has $25,000 in liability insurance coverage, you are entitled to the difference in those amounts from your insurance company up to the amount of underinsured motorist coverage you purchased. So, if you purchased $100,000 of underinsured motorist coverage on your own insurance policy, your insurance company would owe you $75,000.  Of course, since you are dealing with an insurance company you will need to hire a lawyer to make them pay you what they owe you. But at least you have the coverage. You will be compensated fully rather than being forced settle for a paltry $25,000 when your claim in worth $100,000.

Indiana and Kentucky differ in how you will be compensated however. In a Kentucky motor vehicle accident claim or Kentucky motorcycle accident claim, the Kentucky “Underinsured Motorist” statute applies. In an Indiana motor vehicle accident claim or Indiana motorcycle claim, the Indiana “Underinsured Motorist” statute applies.

The two states differ in how the amount you are owed by the insurance company is calculated.  In Kentucky, you receive the full amount of the underinsured motorist coverage you purchase up to the amount of your damages. So, for instance, if your damages are $150,000, and you purchased $100,000 in underinsured motorist coverage, you are entitled to $100,000 from your insurance company. (Your damages are $150,000, the at-fault driver only has $25,000 of insurance to go towards those damages, leaving him “underinsured” by $125,000). So, you are entitled to $100,000 of the $125,000 the at-fault driver was “underinsured” for in your case.  If you had purchased a higher amount of underinsured motorist coverage, say $200,000, you would then be owed the full uncompensated amount of $125,000 from your insurance company (total damages of $150,000 minus $25,000).

Indiana law provides that the amount of underinsured motorist coverage you are entitled to be offset by the liability insurance limits of the at-fault driver. So, in the same example, if your damages were $150,000 and you purchased $100,000 in underinsured motorist coverage, your insurance company would owe you $75,000. ($100,000 underinsured coverage minus the at-fault driver's liability insurance limits of $25,000)  However, if you had purchased $200,000 in underinsured motorist coverage, you would be owed $125,000. ($200,000 underinsured motorist coverage minus at-fault driver's liability limits of $25,000 equals $175,000 of available underinsured motorist coverage available towards your $125,000 of uncompensated damages).

The difference lies in both how the Kentucky and Indiana insurance statutes and insurance policies are written. The following are links to each state's applicable statute:

http://www.lrc.ky.gov/KRS/304-39/320.PDFÂ (Kentucky Underinsured Motorist Statute)

http://www.in.gov/legislative/ic/2010/title27/ar7/ch5.html (Indiana Underinsured Motorist Statute)

We strongly encourage everyone to purchase this additional coverage. Nowadays, the mandatory minimum liability insurance limits of 25,000 simply are not sufficient in most motor vehicle accident claims and motorcycle accident claims.