What exactly is uninsured motorist coverage?

Uninsured/underinsured motorist insurance (UM/UIM) protects you, your passengers, and insured members of your household against bodily injury, property damage, or death caused by another driver who does not have insurance to cover the damages. When it comes to auto insurance, there are numerous types of coverage that can be included in your policy. Some are legally needed by your state, while others are not, and determining which kind of auto insurance you really need and which you can do without can be tough.

Uninsured motorist insurance, commonly known as uninsured/underinsured motorist coverage and abbreviated to UM/UIM, is mandated in some jurisdictions and optional in others, but it should be a major consideration for anyone acquiring auto insurance. Uninsured/underinsured motorist coverage is typically only a few dollars per month, but the amount of coverage it provides can be critical in the event of an accident.

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Key Takeaways

Uninsured/underinsured motorist insurance (UM/UIM) will cover the costs of any bodily injuries or property damage you sustain if another driver causes an accident but does not have insurance to pay for it.

There are two kinds of UM/UIM coverage: Uninsured motorist bodily injury coverage as well as uninsured motorist property damage coverage are available.

Most states make UM/UIM insurance optional, but a certain amount is required by law in states such as Connecticut, Virginia, and New York.

What exactly is uninsured motorist protection?

Uninsured motorist coverage protects you financially if you are involved in an accident with an uninsured driver. Underinsured motorist coverage, which is often combined and sometimes offered separately, financially protects you if you are involved in an accident with a driver whose insurance limits are insufficient to cover the extent of the damage they have caused. Some states, including Connecticut, Maryland, Massachusetts, Minnesota, Nevada, New York, Oregon, and South Carolina, require uninsured/underinsured motorist coverage.

Uninsured/underinsured motorist coverage is divided into two types: bodily injury coverage and property damage coverage.

Uninsured Motorist Bodily Injury (UMBI)

If you are harmed in an accident caused by an uninsured or underinsured driver, UMBI may compensate your expenditures. It may also pay for your or your passengers' injuries in the following situations:

In the event that an uninsured driver is judged to be at fault

You may be entitled to compensation if you have been the victim of a hit-and-run driver.

If you are riding a bike or walking and are hit by an uninsured driver

This coverage covers medical expenses and lost wages, and it may even pay for rehabilitation or funeral expenses if you or a passenger is killed in an accident.

Uninsured Motorist Property Damage (UMPD)

When an uninsured driver hits your car or other property, UMPD pays for the damages. Normally, the costs of repairing your car after another driver hits you would be covered by their liability insurance, but if the other driver is uninsured, you will need uninsured motorist coverage or you will be forced to pay for the damage yourself.

Both types of coverage are not available in all states or from all insurance companies. Because you are likely to have other types of insurance that will protect you from injury, UMBI is the more important of the two. UMPD is frequently referred to as “uninsured motorist insurance.”

How uninsured motorist coverage differs from other types of coverage

Uninsured motorist coverage may overlap with other types of coverage provided by your auto policy or other insurance policies you may have, such as health or disability insurance. In each case, uninsured motorist insurance can provide more comprehensive and additional coverage, but it's important to understand how the coverages compare. The following are the coverage components that comprise a “full coverage” auto insurance policy:

Uninsured motorist liability coverage vs. personal injury protection (PIP)

If you are injured by an uninsured driver, uninsured motorist coverage will pay your medical bills; however, there is another type of auto insurance coverage that may also pay your medical bills in that situation: personal injury protection (PIP).

PIP is another type of auto insurance coverage that is optional in some states but required in “no-fault” states. If you are in an accident, PIP coverage will pay for your medical bills (and those of your passengers), regardless of who is at fault. If you have PIP coverage, it will protect you if you are injured by an uninsured driver; however, PIP coverage limits are typically low. After your PIP limits are met, your uninsured motorist coverage would pay for your medical and other expenses.

Your coverage limit is the most you can be reimbursed by your insurance company. For example, if you have $10,000 in PIP coverage and your accident results in $15,000 in medical expenses, your insurance will reimburse you $10,000 and you will have to pay the remaining $5,000 out of pocket. If you have uninsured motorist liability insurance, it may pay the remaining $5,000.

If you are injured in an accident, both PIP and UM can pay for lost wages. However, as previously stated, PIP limits are generally lower than the coverage provided by uninsured motorist insurance.

Uninsured motorist liability coverage vs. health insurance

Your health insurance will cover your medical expenditures up to the policy limits, minus your deductible and coinsurance, if you are injured in a car accident. That is true whether the accident was your fault or not, so if you have good healthcare coverage and know that any regular passengers in your vehicle have it as well, you may be able to forego uninsured motorist coverage.

Uninsured motorist liability coverage vs. disability insurance

If you are unable to work due to an injury, illness, or disability, your disability insurance may pay you a portion of your paycheck (typically 80 percent) while you recover. Many people have short-term disability coverage through their employers, and long-term disability insurance can be purchased separately.

If you are seriously injured in a car accident and unable to work, disability insurance may cover a portion of your lost wages after a waiting period, but UIM may cover you before disability insurance kicks in (usually after 90 days, for short-term disability policies). Both types of insurance cover wage loss as a result of a motor accident, but UIM has no waiting time.

Uninsured motorist property damage coverage vs. collision coverage

Collision coverage covers for damage to your automobile in an accident regardless of who is at fault; uninsured motorist property damage pays for damage to your automobile after an accident caused by an uninsured driver.

When purchasing insurance, many people choose between uninsured motorist property damage coverage and collision coverage. However, if you have collision coverage, you may not require UMPD.

Collision coverage is more comprehensive than UMPD; for example, if you crash your own car into a tree or are at fault in an accident, collision coverage will pay for the damage to your car, whereas uninsured motorist property damage will only pay if the uninsured driver is at fault.

Is it necessary for me to have uninsured motorist coverage?

The principal motives for the purchase of uninsured motorist cover are that you are needed to rent a vehicle or to finance a company by law and that it gives more protection when you are affected by a motorist uninsured than any other car insurance component. Who should get uninsured/underinsured motorist protection?

1. Drivers in states where it is required by law

Uninsured motorist coverage is required by law for some drivers. In almost every state, auto insurance is required, but the types and amounts of insurance required vary. The most common type of insurance is bodily injury liability coverage, but nearly half of states also require uninsured/underinsured motorist coverage.

The most common amounts of uninsured/underinsured motorist coverage required by states that mandate it are $25,000 per person and $50,000 per accident, which are the same as the liability coverage limits in most states. However, as with all state car insurance requirements, these minimums may be too low for most people, leaving you vulnerable.

2. Drivers who have leased or financed their vehicles

Many leasing and financing companies, including dealerships and banks, require uninsured/underinsured motorist coverage as part of your insurance policy. When you lease or finance a car, another party has an interest in protecting the vehicle, so your lessor or lender will specify certain requirements for the car insurance coverage you purchase, which will typically include some amount of uninsured/underinsured motorist coverage.

3. Drivers who want to be protected from uninsured drivers

Even if your state does not mandate uninsured motorist coverage, you may choose to obtain it to lessen your own risk. (It is recommended by the majority of experts.)

According to the Insurance Information Institute, approximately 13% of drivers in the United States are uninsured, and in some states, that figure rises to 20% (Tennessee and Michigan), 21% (New Mexico), 24% (Mississippi), and 28% (Florida).

If you are hit by one of these drivers and suffer injuries or vehicle damage, you may be held liable — even if the collision was not your fault. (Not to mention the drivers who are underinsured and may not have enough coverage to cover major damages or injuries.)