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In Wilmette last week, a 94-year old woman crashed through the front window of a Panera bread restaurant after losing control of her vehicle.

Nine people were hospitalized following the crash, including several in critical condition.

This incident not raises many questions about why this woman was behind the wheel of a car, but also underlines the importance of having full coverage, including uninsured and underinsured coverage on your own vehicle.

Every automobile liability insurance policy carries policy limits which are the maximum amount of money that the insurer will pay in the event of an accident. In illinois, the state minimums are $20,000 per person and $40,000 per occurrence. The “per person” limit is the most that will be paid for injuries to any one person; the “per occurrence” limit is the total amount that will be paid in any one accident, regardless of how many people are injured.

The most common limits seen on policies sold by reputable carriers are either (a) $50,000 per person and $100,000 per occurrence or (b) $100,000 per person and $300,000 per occurrence.

With nine people needing hospitalization, including some in critical condition, it is pretty clear that this woman’s insurance coverage will be exhausted long before all of the claimants are fully compensated. This is where the value of underinsured motorist coverage comes into play.

When you buy full coverage, you normally get a coverage called underinsured motorist coverage. Underinsured motorist coverage applies when you have more insurance coverage than the at-fault driver or when the at-fault driver’s coverage is exhausted. It fills the gap between the coverage that the at-fault driver has and the damages you sustain, up to your policy limits. A couple of illustrations should help explain the point.

Assume that you get into an accident with a driver carrying the state minimum of $20,000, and you sustain damages in the amount of $50,000. You have $100,000 in underinsured coverage. The at-fault driver’s insurance will pay $20,000 and your underinsured coverage will fill in the gap between the available coverage of the at-fault driver and your damages, so you will collect $30,000 thorugh your underinsured coverage. This way, you are fully compensated for the full amount of your damages.

Let’s look at the restaurant case as an example of how underinsured motorist coverage works. Let’s supposed that the at-fault driver has $50,000 per person limits and $100,000 per occurrence. The $100,000 will have to be divided between the nine injured people. It does not have to be divided evenly, so let’s assume that one of the patrons got $10,000 of the $100,000 available to all of the claimants. Let’s also assume that he had undersinured motorist coverage in the amount $100,000 and had sustained damages of $75,000. In that case, the remaining $65,000 in compensation would come from the underisnured motorist coverage. This gives him full compensation for his injuries, where he would be dramatically under-compensated if he did not have underinsured motorist coverage.

People should be careful to obtain uninsured and undersinured coverage when they get the opportunity. These coverage provide benfits to you when you are injured, and is actually fairly cheap coverage compared to liability and collision coverage. When you are renewing your automobile insurance, you should be careful to ask about this coverage.

For more information on this subject, please refer to our section on Car and Motorcycle Accidents.

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