What Is Uninsured and Underinsured Motorist Insurance Coverage?

Getting hit by a driver without enough auto insurance (or none at all) isn’t too uncommon these days. According to a recent study published by the International Research Council (IRC), 15.4% of drivers were uninsured, and more than one in six (18%) were underinsured in 2023.In some states, the chances of being hit by an uninsured or underinsured driver are higher than the national average. For instance, in the District of Columbia, one in three drivers (33.4%) was either uninsured or underinsured. There, it’s not all that surprising to be hit by someone lacking proper coverage.

Because of this higher presence of uninsured and underinsured drivers on the road, having uninsured (UM) and underinsured (UIM) motorist coverage is crucial. It protects you when the other driver can’t pay for your medical expenses, vehicle repairs, or lost wages after causing an accideThis coverage includes uninsured motorist bodily injury (UMBI) and uninsured motorist property damage (UMPD), along with their underinsured counterparts UIMBI and UIMPD. Together, they ensure you’re covered for both bodily injuries and property damage, even if the at-fault driver disappears or doesn’t have enough liability coverage.

So, keep reading to learn more about UI/UIM insurance coverage. We’ll explain how it works, what it includes, how much you might need, and more.

How Does Uninsured and Underinsured Motorist Coverage Work?

Well, the process is simple. Just picture this: a driver hits you from behind, and when it’s time to get compensated, you find out the at-fault driver either has no insurance or so little liability/state-mandated insurance that it doesn’t even come close to covering your losses. In such a situation, your UM and UIM insurance coverage steps in. 
 
If the accident causes any physical injuries, the UMBI/UIMBI (uninsured/underinsured motorist bodily injury) helps you pay your medical bills, lost wages, and other health-related costs. And the UMPD/UIMPD (uninsured/underinsured motorist property damage) pays for vehicle repairs, or any other property damage. Even if the other uninsured/underinsured driver flees the scene, this coverage will work for you and pay for whatever is damaged, including pain and suffering it caused. Once your insurer pays for everything, they will look for the other driver and try to recover the amount either through his/her insurer or by filing a lawsuit.

Practical Example of Uninsured/Underinsured Motorist Coverage in Action

Let’s say you’re driving home, and an at-fault driver with only $15,000 in liability coverage crashes into you. Your medical expenses reach $45,000, and your car repair estimate is $12,000. So, you need $57,000 to cover your losses.

So, here's how uninsured/underinsured motorist coverage helps you:

• The other driver’s insurance coverage pays the first $15,000 for your injuries. 
• Your underinsured motorist bodily injury (UIMBI) pays the remaining $30,000 in medical bills (if you have the policy limit). 
• Your underinsured motorist property damage (UIMPD) covers your car repairs up to your limit, minus the deductible.

Now imagine the driver had no car insurance at all. In that case, your uninsured motorist bodily injury (UMBI) and uninsured motorist property damage (UMPD) coverage would handle both the injury and repair costs.

What Does Uninsured (UM) and Underinsured (UIM) Motorists Insurance Cover?

As has been said, UM/UIM protects you when another driver doesn’t have enough auto insurance or any at all to pay for your losses. Like liability auto insurance, this coverage comes in two main parts: one for bodily injury and another for property damage. Both work together to keep you financially secure. 

Here's what UM/UIM insurance typically covers:

• Uninsured Motorist Bodily Injury (UMBI): Covers your medical bills, lost wages, and pain and suffering after being hit by an uninsured driver or hit-and-run driver.
• Underinsured Motorist Bodily Injury (UIMBI): Pays the difference when the at-fault driver’s liability insurance isn’t enough to cover your injuries.
• Uninsured Motorist Property Damage (UMPD): Helps pay for repairs or replacement of your vehicle or other property if hit by a driver with no insurance.
• Underinsured Motorist Property Damage (UIMPD): Covers the remaining damage costs after the other driver’s insurance coverage runs out.

In many states, UMPD and UIMPD may include a small deductible, but it’s usually far less than what you’d pay under collision coverage. 
In essence, if you’re hit by an uninsured driver or if you have encountered a hit-and-run accident with someone who has low liability insurance, UM/UIM coverage ensures you don’t end up footing the bills for someone else’s negligence.

Whether you're a high-risk or regular driver looking for affordable car insurance, reach out to USA Auto today. We’ll help keep you financially protected and confident behind the wheel. Our liability, PIP, comprehensive, collision, and UM/UIM coverages are tailored to your needs, so you don’t have to worry about the other driver’s insurance. Get your free car insurance quote now and see how much you can save with reliable, hassle-free coverage.

What Isn’t Covered by UM/UIM Insurance?

UM/UIM coverage is surely one of the most valuable coverages. However, it won’t protect everything. Here’s what it typically doesn’t cover:  

• Accidents where you’re at fault. Your collision insurance coverage applies instead. 
• Vehicle theft or vandalism. These fall under comprehensive car insurance. 
• Mechanical failures or regular wear and tear. 
• Personal belongings inside your car, like phones or laptops covered by home insurance or renters insurance. 
• Damages exceeding your policy limits.

Difference Between Uninsured and Underinsured Motorist Coverage 

Hopefully, by now you understand what uninsured and underinsured motorist coverages are. However, if you're still unclear about the differences between the two, here's a quick table for you:

Which States Require Uninsured or Underinsured Motorists Coverage? 

According to the Insurance Information Institute (III), 20 U.S. states and the District of Columbia require uninsured or underinsured motorist coverage by law. However, in states where UM/UIM coverage is optional, drivers may reject it in writing when purchasing auto insurance.

Here’s a list of states that require UM and/or UIM coverage (either fully or partially):

• Connecticut
• District of Columbia
• Illinois  Kansas
• Maine
• Maryland
• Massachusetts
• Minnesota
• New Hampshire
• New York
• North Carolina
• North Dakota
• Oregon
• South Carolina
• Vermont
• Virginia
• West Virginia
• Wisconsin

How Much Uninsured/Underinsured Motorist Coverage Do I Need?

A good rule of thumb is to match your liability coverage limits. For example, if your liability insurance is $100,000 per person and $300,000 per accident, consider the same for UM and UIM.    This ensures your insurance policy can cover major expenses such as medical costs, vehicle damage, and lost wages. Even if the other driver’s insurance coverage falls short, you are relieved to be covered.     In case of frequent driving or in a state with a high number of uninsured drivers, choosing higher limits is better. It’s usually affordable. The extra protection you are getting is worth every penny. 

Minimum UM/UIM Coverage Limits by State

States that require UM/UIM insurance coverage by law also set minimum policy limits. Here are those limits by state: 

How Much Does Uninsured and Underinsured Motorist Insurance Cost?

The cost of uninsured and underinsured motorist coverage is usually affordable. On average, it may add about 5% to 10% to your total car insurance premium. Based on our research, this rate could vary from $30 to $80 per year.

However, the exact cost depends on several factors, including your driving record, claim history, state requirements, and your chosen coverage limits. Besides, drivers who pick higher UM/UIM limits or live in states/cities with more uninsured motorist pay slightly more. 

In fact, according 2016 study, when the number of uninsured drivers goes up by 1%, insurance premiums in that area can rise by 1 to 2% for everyone. Plus, other factors like location, vehicle type, and deductible influence the price. So, it's best to speak directly with your insurer or auto insurance agent to understand the cost of uninsured and underinsured motorist coverage.

Comparing Uninsured/Underinsured Motorist Coverage Vs. Liability Vs. Collision 

All three coverages protect you financially after an accident. However, they work differently. Here’s a simple comparison to help you see how each one actually helps.

How Do I File a UM/UIM Car Insurance Claim?

To file your UM/UIM auto insurance claim successfully, act fast and try to document everything. Call the police and get a report. Then contact your insurer and file a claim under uninsured/underinsured motorist coverage.

Steps to follow:

• Get the police report and the other driver’s info, if available. Photograph the scene and damage.
• Seek medical care and save all records and bills, including medical expenses and proof of lost wages.
• Tell your agent you’re filing a UM/UIM claim and give the police report, photos, medical records, and receipts.
• Meet deadlines in your insurance policy (many require notice within 30-90 days).
• Expect an investigation, possible set-off adjustments, and for UMPD to sometimes have a deductible, and hit and run laws may vary by state.

Is Uninsured Underinsured Motorist Coverage Worth It?

Yes, it is absolutely worth it, especially if you live in an area with a high number of uninsured drivers or in a state where it's legally required. It covers medical bills, lost wages, pain and suffering, and other damages that your health insurance or collision coverage might not fully pay.

Uninsured and Underinsured Motorist Coverage FAQs

Is uninsured the same as underinsured?

No. As their names suggest, uninsured drivers have no insurance whatsoever, while underinsured drivers have coverage that isn’t enough to pay for their damages. 

Does UM/UIM cover hit-and-run accidents?

Yes. Uninsured motorist coverage usually applies to hit-and-run accidents, treating them as uninsured driver incidents. This helps cover medical bills or damages if the at-fault driver cannot be identified or lacks insurance.

Which states have the highest and lowest numbers of uninsured drivers?

Mississippi has the highest rate at 28.2% followed by New Mexico at 24.1%. Maine has the lowest at 5.7% followed by Utah at 6.2%. Michigan ranks 4th highest with 22.3% uninsured drivers.

Do I have to have uninsured motorist Bodily injury coverage if I have health insurance?

You should have uninsured motorist bodily injury even if you have health insurance. Health insurance isn’t equivalent to UM/UIM coverage, as the purpose of these two insurances is different. And your health insurance doesn’t cover all costs from a car accident. So, the answer is yes and no both, and the right choice depends on your situation and other factors like where you usually drive your car, state requirements, and so on.

Why would you reject uninsured motorist coverage?

Some drivers reject it to save money on premiums, but this can be risky. If you’re in an accident with an uninsured driver, you could face costly repair or medical expenses.

Is uninsured/underinsured motorist insurance required in Michigan?

No, Michigan does not require UM/UIM coverage. But with more than 22% of drivers uninsured, it’s strongly recommended to protect yourself financially after an accident.

Do I really need uninsured motorist coverage in Colorado?

Colorado uninsured driver rate is about 19.7% which is higher than the national average of 15.4%. So yes, although it isn’t required in Colorado, we still recommend keeping a UM/UIM coverage to protect yourself from an uninsured/underinsured driver.

What is the uninsured motorist law in California?

California requires auto policies to include uninsured motorist bodily injury coverage unless the driver rejects it in writing. This covers medical expenses and damages if the other driver lacks coverage.

Do I need uninsured motorist coverage if I have collision and comprehensive?

Yes. Because they serve different purposes. Collision coverage covers damage to your vehicle regardless of fault, but UM coverage protects you for medical expenses, lost wages, and pain and suffering if an uninsured or underinsured driver hits you.

How do insurance companies go after uninsured drivers?

Insurers may use subrogation, a legal process to recover costs from the uninsured driver directly. But if the driver has no assets or income, collecting money can be difficult, which makes UM coverage valuable for policyholders.

Do you have to pay the deductible for an uninsured motorist?

It depends on your policy. Some states require a deductible for UMPD claims, which typically ranges from $100 to $1,000. Check your insurance policy for details to avoid surprises when filing a claim.

References:

1. Uninsured and underinsured motorists: 2017-2023 | IRC. (n.d.). https://www.insurance-research.org/node/130
2. Facts + Statistics: Uninsured motorists | III. (n.d.). https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists
3. Stephen (Teng) Sun, Constantine Yannelis, Quantifying the Premium Externality of the Uninsured, Journal of the European Economic Association, Volume 14, Issue 2, 1 April 2016, Pages 405–437, https://doi.org/10.1111/jeea.12148