Vehicles are typically the second largest purchase people make. According to Kelley Blue Book, the average price of a new car in June 2023 was $48,808. In addition, used car values remain high. According to the Insurance Research Council, approximately 12% of all drivers are uninsured. Many states require a minimum amount of property damage liability insurance at an amount much less than the average price of a new car. For example, Illinois requires only $20,000 of property damage liability insurance. Wisconsinrequires only $10,000 for property damage coverage. If an at-fault driver with minimum insurance coverage damages your vehicle beyond repair, you may not be able to recover the difference between the minimum insurance coverage and the value of your vehicle from the at-fault driver if the at-fault driver is insolvent, files for bankruptcy, or is otherwise unable to pay. If you have a loan for your vehicle, you may be left paying off the loan for a totaled vehicle you cannot drive.
Instead of trying to recover from an at-fault driver, it may be wise to determine if your state allows you to purchase uninsured (UM) and underinsured (UIM) motorist property damage coverage. Uninsured motorist property damage coverage allows you to seek reimbursement from your own insurance company for repairing your vehicle or for the value of your vehicle if the repairs to your vehicle exceed the value of your vehicle when the at-fault driver does not have insurance. Underinsured motorist property damage coverage allows you to seek reimbursement from your own insurance company when the at-fault driver has insurance coverage but not enough insurance coverage to cover the full amount of the claim. If you have a loan for your vehicle or you are leasing your vehicle, you may be required to have collision coverage. Collision coverage will cover the repair or total loss of your vehicle due to a collision, regardless of fault.
Since new vehicle prices are increasing, the value of used vehicles remains high, approximately 12% of all drivers are uninsured, and the minimum amount of property damage liability insurance required by some states is below the value of the average new car, it is wise to consider purchasing uninsured and underinsured motorist property damage coverage to protect your asset.