Why should I have Uninsured Property Damage if I have Collision?
This quest is often emailed to us. The question reveals the confusion of the public out there. If you try to read the insurance policy you are going to see that it is not very straight forward.
Collision will cover your car subject to a deductible (the portion you have to pay). So if the damages to your car are $5,000 and the deductible is $500, then the insurance company will pay $4,500.
Uninsured Property Damage (UMPD) works in a similar manner. The UMPD coverage will cover your damage mines a deductible. Most of the time the deductible amount of the UMPD is lower than the collision ($100 or $300). So in the same case scenario above, the insurance company will pay $4,900.
But the difference is not just a lower deductible. There are other advantages to have UMPD. UMPD makes you a third party on your own policy. You will be making a claim against your own insurance company as if you were hit by someone they insured. They would have to pay what you would be entitled to recover against that person. This means that you are not bound by any other terms on the policy aside for those forward in the UMPD section of the policy.
This has strong ramifications, because in many occasions you would be able to make diminished value claims against your own auto carrier. You would be entitled to receive a rental car (unless that specific section of the police UMPD would exclude loss of use, most polices do not) even if you do not carry that coverage in your policy.
