Underinsurance is an optional insurance policy, which you can purchase when you get liability insurance for your car. It is important to make sure that you have sufficient "supplementary underinsurance" on your motor vehicle so that there is enough insurance coverage in the event that you get into an accident and the other vehicle has only a minimum amount of insurance.

This is how supplementary insurance works. If another vehicle has only $25,000.00 minimum policy and your injuries, for example are worth half a million if you sue, you are limited to $25,000.00 unless you have underinsurance. If you had the protection of $500,000.00 in underinsurance for your car, you could theoretically get $475,000.00 ($500,000 less the $25,000 from the other car). This way you are not left holding the bag.

Because of some fairly recent federal legislation, it is even more important that you have a supplemental underinsurance policy.

Not too long ago Congress passed legislation eliminating owner liability for certain lease and rental companies. That means if you get involved in an accident with a rental vehicle you may be stuck with the limit of liability insurance that the renter of the vehicle took out when he or she rented the vehicle. Suppose they rented the vehicle in another state where the limits for insurance are even less than in New York. Without your own underinsurance policy, you could be stuck collecting $15,000.00 (the legal minimum in some States) for your injuries.

Typically you can underinsure up to the limits of your liability insurance coverage. In today’s world it is just not prudent to drive a vehicle the legal minimum coverage – you should have at the least be covered by a few hundred thousand dollars.

The way you resolve an underinsured case if it cannot be settled is to go to arbitration after first getting the consent to settle the case with the insurance for the vehicle which caused the accident.

One often hears people say, "I wish I knew about underinsurance, because there is no doubt I would have made sure it was on my insurance policy". So do not come up short – take a look at your insurance policy and protect your family.