You are in your car, stopped at a red-light, when suddenly you are hit from behind by another driver that was not paying attention to the road. You suffer extensive injuries that will require thousands of dollars in losses, only to find out the other driver is not insured. Or, maybe they are insured, but you find out that they only have the minimal amount of coverage required by law and that amount is not enough to cover the losses you incur. Under these scenarios, will you be covered for your damages through your own auto insurance policy? Well, that all depends on whether or not you selected the option for uninsured and underinsured motorist coverage when you took out your automobile insurance policy.
Uninsured motorist coverage is designed to protect you when the at-fault driver does not have insurance coverage. Underinsured motorist coverage is coverage that you purchase to protect yourself in the even that you are in an accident and the other party who is responsible for the accident does not have enough insurance coverage to compensate you for your losses. Therefore, when you have exhausted the amount of coverage from the policy of the at-fault party, you then look to your own personal insurance policy for the additional amount of money which will compensate, or make you whole, for your injuries and losses.
For example, suppose you are in an accident and incur $150,000 in damages (medical bills, lost wages for time missed from work, etc.). If the at-fault driver has elected to only carry the state minimum in coverage, which is $15,000, then you would not be able to recover any additional money over that $15,000 if you did not purchase underinsured motorist coverage. If the at-fault driver had no insurance coverage and you did not purchase uninsured motorist coverage, then you could potentially collect nothing.