Introduction
All drivers do not have the mandatory auto insurance, and this may risk you in the event of an accident. Uninsured motorist (UM) and underinsured motorist (UIM) coverage protect you financially when the other driver lacks sufficient insurance to compensate for damages. The coverage is rarely considered but can prove vital in protecting your finances during an accident.
- What Is Uninsured and Underinsured Motorist Coverage?
UM and UIM coverage will protect you if you get into an accident with a driver who doesn’t have insurance or doesn’t have enough insurance.
Types of Coverage:
Uninsured Motorist (UM) Coverage – Pays for medical bills and damages if the at-fault driver does not have insurance.
Underinsured Motorist (UIM) Coverage – Pays for expenses when the at-fault driver’s insurance is less than the amount needed to pay for all damages.
What UM and UIM Pay For:
Medical expenses for yourself and your passengers
Wages lost if you are unable to work because of injuries
Pain and suffering damages
Auto repair vs. replacement if covered under your policy
- Why Do Uninsured Motorist Coverage Matter?
While auto insurance is mandatory in most states, a significant number of drivers do not have insurance.
Important Statistics:
According to the Insurance Research Council (IRC), roughly one in eight U.S. drivers is uninsured.
In some states, over 20 percent of drivers have no insurance.
Many drivers carry only the minimum liability coverage, which may not be enough to cover serious accidents.
Without UM or UIM coverage, you may have to pay for medical expenses and car repairs out of pocket if an uninsured or underinsured driver causes an accident.
- What Happens If You Get Hit by an Uninsured Driver?
If you collide with an uninsured driver and are not covered for UM, the choices are scarce:
Pay your own medical fees and repair charges.
Sue the driver but might find it hard to recoup the monies if he or she doesn’t have enough money.
Seek payment for your medical charges under health insurance but won’t have coverage for your lost income and car repair charges.
If you do carry UM coverage, your insurance will pay for you, just as if the at-fault driver had adequate insurance.
- How Underinsured Motorist Coverage Works
Even if a driver carries insurance, their policy will not always pay for all costs.
Example Scenario:
You are in an accident, and the at-fault driver carries only $25,000 of liability coverage.
Your medical bills and car damages total $50,000.
The other driver’s insurance covers $25,000, but there is a remaining $25,000 deficiency.
Your UIM coverage takes care of the remaining expense, so you don’t pay out of pocket.
If you didn’t have UIM coverage, you would pay the remaining $25,000 out of pocket.
- Do You Need Uninsured and Underinsured Motorist Coverage?
UM and UIM coverage are required in many states, but even if your state does not require it, you should still purchase it.
Who Should Get UM and UIM Coverage?
High-uninsured state drivers – If most drivers in your state don’t have insurance, this coverage is a must.
Those who can’t afford out-of-pocket expenses – UM and UIM coverage helps shield you from surprise expenses.
High-risk area drivers – If you reside in a densely populated city or high-accident area, this coverage will come in handy.
Individuals with no health insurance – UM coverage can assist with paying medical expenses if you don’t have health insurance.
- How Expensive Is Uninsured and Underinsured Motorist Coverage?
UM and UIM coverage are not too expensive, generally costing only $50 to $200 annually added to your policy, depending on:
Your residence – Rates depend on the amount of uninsured drivers in your state.
Your limit of coverage – Higher limits are more expensive.
Your insurance company – Various providers charge differently.
Given the financial protection it offers, the price of UM and UIM coverage is minimal relative to the risks of driving without it.
- What Are the Coverage Limits for UM and UIM?
The majority of insurance companies provide UM and UIM coverage in split limits or combined single limits.
Example of Split Limits:
Coverage Type\tLimit per Person\tLimit per Accident
Uninsured Motorist Bodily Injury\t$50,000\t$100,000
Underinsured Motorist Bodily Injury\t$50,000\t$100,000
Uninsured Motorist Property Damage $25,000-
A combined single limit policy would pay for up to a predetermined amount per accident, like $100,000 total for all damage.
- How to Get UM and UIM Coverage Added to Your Policy
If you don’t have uninsured and underinsured motorist coverage in your current policy, you can typically add it by:
Reaching out to your insurance company – Check about coverage levels and fees.
Selecting the correct coverage limits – Make sure the limits are in accordance with your potential financial exposures.
Shopping around for quotes from multiple carriers – Certain providers give a better price for UM and UIM coverage.
Checking your state minimums – Some states have certain limits required, others make UM/UIM voluntary.
Conclusion
Uninsured and underinsured motorist coverage is a necessary safeguard against drivers who don’t carry adequate insurance. With hundreds of millions of uninsured and underinsured drivers on the road, this coverage will protect you financially in the event of a collision. Although not mandatory everywhere, UM and UIM coverage are inexpensive additions that can pay you thousands of dollars in medical and repair expenses. If you desire assurance, purchasing UM and UIM coverage as part of your policy is a good choice.