If you have a license and a vehicle, you probably already know that Iowa law mandates that everyone who operates a vehicle has an active motor vehicle liability insurance policy. However, just like with other rules intended to make the roads safer, not everyone abides by the state law mandating liability insurance.
Some people forget to pay their premiums and don't realize that their policy has lapsed. Others are unable or unwilling to a pay for the insurance and intentionally drive on the roads, well aware of the fact that there is no insurance to protect them or anyone else in the event of a crash. If you end up in a collision with someone who doesn't have insurance, you could find yourself in a difficult financial situation.
What insurance does Iowa require drivers to have?
Iowa law requires that drivers carry at least $20,000 in bodily injury coverage for one person, $40,000 bodily injury coverage for all parties hurt, and an additional policy for $20,000/$40,000 for uninsured or underinsured motorist coverage. The state does not require personal liability, collision or comprehensive coverage.
You can actually waive the uninsured or underinsured coverage by signing special forms with your policy. However, doing so could put you at risk if you wind up in a crash with someone who does not have an active liability insurance policy. These riders help offset any costs that the other party's insurance should cover if they had a policy. You don't want to forgo the coverage, only to realize too late how important it was.
What protection does underinsured coverage offer?
When someone else is at fault for a crash or collision, your insurance company will typically go after that person's insurance to recover any amount paid to you. If that other driver does not have an active policy or has a policy that offers less coverage than the state minimum, that could leave a substantial financial burden for you.
If someone doesn't have the money to keep his or her insurance current, chances are good that they will not have the assets to offset your medical bills and other losses if you take them to court. Underinsured and uninsured policy riders protect you against those financial losses, ensuring that you receive adequate coverage, even if your insurance company can't recover those payouts by going after the other driver's insurance company.
Your insurance company has an obligation to you, as a policy holder, to pay reasonable claims. If your insurance company denies you coverage you paid for, that could be an example of bad faith practices on their part. Investing in adequate coverage to ensure your expenses are covered regardless of the insurance status of the other party is typically a good decision.