Uninsured Motorist (UM) coverage is a crucial part of your auto insurance policy, protecting you when you’re injured in an accident caused by a driver who has no insurance or not enough of it. However, not all UM policies work the same. Two terms you’ll often come across are “reduced by” and “added to” coverage options. Understanding the difference between them can greatly affect the compensation you receive after an accident.
What Is Uninsured Motorist Coverage?
Uninsured Motorist coverage pays for your medical bills, lost wages, and sometimes property damage if the at-fault driver has no insurance or lacks sufficient coverage. This protection ensures that you’re not left with the financial burden when someone else breaks the law or can’t afford proper insurance.
“Reduced By” UM Coverage
“Reduced by” coverage means that whatever amount the at-fault driver does carry in liability insurance will be subtracted from your UM policy limit.
Example:
If the at-fault driver has $25,000 in liability coverage and you have $50,000 in UM coverage, you won’t receive the full $50,000. Instead, your UM coverage is reduced by the $25,000 already available, leaving you with an additional $25,000 in protection.
This type of coverage provides a safety net on top of what the at-fault driver has, but not in addition to your full limit.
“Added To” UM Coverage
“Added to” coverage is more generous. Your UM limits are added on top of the at-fault driver’s coverage. It gives you the full amount you’ve purchased, regardless of what the other driver carries.
Example:
If the at-fault driver has $25,000 in liability insurance and you have $50,000 in UM coverage, you’re entitled to a total of $75,000 in potential benefits—$25,000 from the at-fault driver and $50,000 from your policy.
This option gives you a broader financial safety net, especially in severe accidents where medical bills exceed minimum coverage limits.
Key Differences
TABLE
Which One Should You Choose?
If you’re looking to save on premiums and don’t drive often, “reduced by” coverage might be sufficient. However, if you want peace of mind and more financial protection, “added to” coverage is usually worth the extra cost.
In states like Georgia, for example, you must choose between these two options when purchasing UM coverage, so understanding the difference is critical. Talk to your insurance agent to make sure your policy reflects the kind of protection you need.
Final Thoughts
Choosing between “reduced by” and “added to” uninsured motorist coverage can mean the difference between getting by and getting fully compensated after an accident. While “added to” offers better protection, both options are far better than having no UM coverage at all. Protect yourself from the unknown by making an informed decision today.