For extra insurance protection after a car accident with an at-fault driver who isn't carrying sufficient liability insurance to pay bodily injury losses, Connecticut drivers have a pretty unique car insurance coverage option called "underinsured motorist conversion coverage." This kind of coverage is different from standard underinsured motorist insurance, as it's more policyholder-friendly. In the sections that follow we'll explain how standard underinsured motorist coverage works, look at some coverage scenarios that can create problems for injured claimants, and illustrate how Connecticut's "Conversion Coverage" option can alleviate those problems.
Underinsured motorist insurance sounds pretty simple, at least in theory. It is coverage that you purchase as part of your own car insurance policy, and it is meant to provide you with additional financial protection when you're in an accident with another driver who is found to be at fault for causing the crash, but whose liability limits aren't enough to cover your medical expenses and other losses stemming from the accident.
(Learn more about Uninsured and Underinsured Motorist Insurance.)
So, if you've got underinsured motorist coverage in that situation, you don't have anything to worry about anything, right? Not necessarily. Let's look at a few examples.
Example 1: Here is a scenario in which your underinsured motorist coverage won't cover all your bodily injury-related losses stemming from a car accident, even when the numbers seem to add up in your favor:
Here, the amount you can collect is not the full $125,000 (the other driver's $50,000 plus $75,000 from your own uninsured motorist coverage). You can only collect $75,000. That's because your own insurance carrier will get a credit for money coming from any other sources -- here, that's the $50,000 from the other driver's liability insurance. Your own coverage will only add an additional $25,000.
In other words, in this case your underinsured motorist coverage limits ($75,000) act as a cap on how much you can collect in the accident with the underinsured driver, and that cap takes into consideration whatever the at-fault driver can pay under his or her own liability coverage. Only after that does your own underinsured coverage kick in to make up the difference -- up to the limits of your underinsured coverage, not on top of the other driver's liability coverage.
Look at the specific details and language in your own policy to understand how your car insurance coverage works. But the lesson here is that your underinsured coverage may not apply to cover all of your losses (medical expenses, etc.) when those losses are higher than your underinsured motorist coverage (depending on the at-fault driver's own liability policy limits).
Example 2: Now let's look at a scenario in which your own underinsured motorist coverage would be sufficient to cover all of your medical expenses:
Here, you're left with an additional $25,000 in underinsured motorist coverage after the other driver's $75,000 "credit" is subtracted from the $100,000 limit on your underinsured coverage. So, you can use that $25,000 to cover your medical expenses stemming from the accident.
In Connecticut, "Underinsured Motorist Conversion Coverage" is an automobile insurance policy option that can provide protection against the kinds of financial gap we illustrated in the above section.
If you choose to purchase conversion underinsured motorist coverage in Connecticut, you'll be able to receive up to the full amount of your underinsured motorist coverage regardless of money paid by other sources (i.e. the other driver's liability coverage).
So, let's look back at the first coverage example discussed above, this time where the injured driver has purchased underinsured motorist conversion coverage:
Here, your $75,000 conversion underinsured motorist coverage will be added on top of the $50,000 coming from the other driver's liability insurance, so that all of your medical expenses and related losses can be paid for.
(Learn more about Connecticut Car Insurance Requirements.)
Whether or not you live in Connecticut, check the details of your car insurance policy and talk to your agent to understand how different coverage options work and how to best protect yourself if you're in an accident with an underinsured driver.