Underinsured motorist coverage, or UIM, is an important type of auto insurance coverage, especially for those living in states where it is required. This type of coverage provides protection for accidents where an at-fault driver carries a liability limit but it is not enough to cover the associated damages. UIM coverage is important because it fills in the gap after a traditional auto insurance policy pays out the maximum amount.

UIM coverage can prove to be beneficial in a variety of situations. This coverage pays out after an accident in which the at-fault driver did not have enough coverage to cover the related medical costs and other expenses such as damage to property. For example, if you were in an accident and the at-fault driver had a liability limit of $20,000 but the damages amounted to $50,000, then UIM coverage would pay the remaining $30,000. Additionally, UIM coverage also pays out if an uninsured driver causes an accident and is unable to pay out the related expenses.

The cost of UIM coverage varies from state to state, however, it is typically a relatively inexpensive addition to a traditional auto insurance policy. Some states, such as New Jersey, Florida and California, require drivers to carry UIM coverage, while other states only require uninsured motorist coverage. Regardless of the state, it is important to have adequate coverage to meet the needs of an uninsured or underinsured driver who caused an accident.

In the end, UIM coverage will fill in the gap when an at-fault driver's insurance is not enough to cover the associated expenses after an accident. UIM coverage also pays out in cases involving an uninsured driver, which is why it is important to know if your state requires this kind of coverage. Even if your state does not make it mandatory, it is a good idea to consider UIM coverage, as it is a relatively inexpensive add-on to your auto insurance policy that provides additional protection in case of an accident.