Uninsured and Underinsured Motorist Coverage

You can control how carefully you drive and how much insurance you buy. You cannot control whether the driver who hits you carries insurance. Despite state requirements, a meaningful share of drivers on American roads are uninsured, and many more carry only the minimum their state allows. Uninsured and underinsured motorist coverage exists for exactly that gap.

Uninsured motorist coverage (UM)

Uninsured motorist coverage pays when you are hurt, or in some states when your car is damaged, by an at-fault driver who has no liability insurance. In many states, it also applies to hit-and-run accidents where the other driver is never identified, though some states require physical contact or a prompt police report for hit-and-run claims.

UM usually comes in two parts:

• Uninsured motorist bodily injury (UMBI) pays for injuries to you and your passengers, including medical bills, lost wages and, in many states, pain and suffering, up to your limit.
• Uninsured motorist property damage (UMPD) pays to repair your car in states that offer it. It may have its own deductible and limit. If you already carry collision coverage, UMPD may overlap with it, and some states do not offer UMPD at all.

Underinsured motorist coverage (UIM)

Underinsured motorist coverage applies when the at-fault driver has insurance, but their liability limits are too low to cover your losses. Imagine a serious crash that causes $90,000 in injury costs, and the other driver carries a $25,000 bodily injury limit. Their insurer pays its $25,000 limit, and your UIM coverage may help with the remaining amount, up to your own UIM limit.

States calculate UIM in different ways. In some, UIM pays the difference between your losses and the other driver's limit. In others, it is calculated by subtracting the other driver's limit from your UIM limit. Your policy and your state's rules determine which method applies, so it is worth asking how it works on your policy.

Is it required?

Requirements vary widely:

• Some states require uninsured motorist coverage, and some also require underinsured motorist coverage.
• Many states require insurers to offer UM and UIM, and allow you to reject it or choose lower limits only in writing.
• Some states treat it as fully optional.

If you are ever asked to sign a form rejecting UM or UIM coverage, read it slowly. That signature is the moment you decide to carry this risk yourself.

Why it matters even with health insurance

Health insurance may cover much of your medical care after a crash, but it typically does not replace lost income, cover pain and suffering, or pay for passengers who are not on your health plan. It also comes with its own deductibles and copays. UM and UIM bodily injury coverage can fill some of those gaps, depending on your state and policy.

Choosing your limits

A common approach is to match your UM and UIM limits to your own liability limits. The thinking is simple: you protect yourself as well as you protect others. If you carry 100/300 bodily injury liability, consider UM and UIM limits of 100/300 as well. Some states do not allow UM limits to exceed your liability limits.

Increasing UM and UIM limits often costs less than people expect, because these coverages pay only in specific situations. The best way to know is to ask for your quote with and without higher limits and see the difference.

Stacking

In some states, if you insure more than one vehicle, you may be able to "stack" UM coverage, which combines the limits for each vehicle into a larger total. Stacked coverage usually costs more than unstacked coverage. Not every state allows stacking, and the rules vary, so ask whether it is available where you live.

What to do if it happens

If you are hit by a driver who has no insurance, or by a driver who leaves the scene, call the police, get medical care if needed, write down everything you can remember about the other vehicle, and notify your insurer promptly. Many UM claims depend on a timely report. Our Teaching on what to do after an accident includes a full checklist.

The calm view

Uninsured motorist coverage is protection against someone else's choices. You may never need it. If you do, it may be the coverage that matters most.

This Teaching is general information, not legal, tax or financial advice. Coverage rules, requirements and options vary by state and by policy. Always read your policy documents. Car Insurance Buddha is not an insurance carrier, agency, or broker.