Uninsured and Underinsured Automobile Coverage
Purpose
This coverage protects the insured when injured by an uninsured motorist, a hit-and-run driver, or an underinsured motorist whose liability limit is insufficient. It fills the gap left by compulsory liability coverage and is mandatory in most provinces.
How it works
Coverage D typically responds on a first-party basis: the insured claims directly from their own insurer for damages they could have recovered from the at-fault party. Limits are usually equal to the policy's liability limit. The insured must generally exhaust the at-fault driver's coverage first for underinsured claims. Subrogation rights transfer to the insurer.
Key distinctions
Uninsured = no policy at all. Underinsured = policy exists but is inadequate. Hit-and-run = unidentified driver, requiring prompt reporting and corroborating evidence. Note that claims against an unidentified driver often require notice to police within a specified period.
Traps
(1) Confusing uninsured with underinsured. (2) Forgetting the requirement to report a hit-and-run promptly. (3) Assuming coverage D applies to property damage - it usually covers bodily injury only. (4) Overlooking that the insured's own negligence may reduce recovery.
Rule of thumb
If the at-fault party cannot pay the full judgment, think Coverage D. If the at-fault party has no policy at all, it is a straightforward uninsured claim.