You carry insurance to protect yourself and others. But what happens when the other driver doesn't have insurance, or doesn't have enough? That's where uninsured and underinsured motorist coverage comes in. This often-overlooked protection can make the difference between full recovery and financial hardship after an accident that wasn't your fault.
The Problem: Uninsured Drivers Are Everywhere
Despite legal requirements in nearly every state, a surprising number of drivers operate vehicles without insurance. According to the Insurance Information Institute, approximately 13% of motorists nationwide drive uninsured. That's roughly one in eight drivers on the road.
The rates vary dramatically by state. In some states, more than one in five drivers lacks insurance coverage. States with the highest uninsured motorist rates include:
- Mississippi: Nearly 30% of drivers uninsured
- Michigan: Approximately 26% uninsured
- Tennessee: Around 24% uninsured
- New Mexico: About 22% uninsured
- Washington: Roughly 21% uninsured
Even states with lower rates still have significant numbers of uninsured drivers. In states like Massachusetts and New York, where uninsured rates hover around 6-7%, that still means encountering an uninsured driver every fifteenth vehicle on average.
What Uninsured Motorist Coverage Protects
Uninsured motorist coverage (UM) steps in when an at-fault driver has no insurance to pay for the damage they cause. This coverage typically comes in two forms that work together to protect you.
Uninsured Motorist Bodily Injury (UMBI)
This coverage pays for injuries to you and your passengers when an uninsured driver causes an accident. It functions similarly to the other driver's liability coverage would have, if they'd had any.
UMBI covers:
- Medical expenses: Hospital bills, surgery costs, rehabilitation, and ongoing treatment
- Lost wages: Income you lose while recovering and unable to work
- Pain and suffering: Compensation for physical pain and emotional trauma
- Funeral costs: Burial and funeral expenses in fatal accidents
Uninsured Motorist Property Damage (UMPD)
This coverage pays for damage to your vehicle when an uninsured driver hits you. Some states include this automatically with UMBI, while others offer it as a separate optional coverage.
In many cases, collision coverage can handle vehicle damage regardless of who's at fault. However, UMPD typically comes with a lower deductible, or no deductible at all, making it valuable even if you carry collision coverage.
Understanding Underinsured Motorist Coverage
Underinsured motorist coverage (UIM) addresses a different but equally important problem. This coverage activates when the at-fault driver has insurance, but not enough to cover all the damage they caused.
Consider this scenario: You're injured in an accident caused by a driver who carries their state's minimum liability limits of 25/50. Your medical bills, lost wages, and other costs total $75,000. The other driver's insurance pays their $25,000 limit, but you're still facing $50,000 in uncovered expenses.
If you carry underinsured motorist coverage with limits of 100/300, your UIM coverage pays the remaining $50,000, up to your policy limits. Without UIM, you'd be responsible for collecting that balance directly from the at-fault driver, which often proves impossible.
Hit-and-Run Protection
Uninsured motorist coverage also protects you in hit-and-run accidents where the other driver flees the scene. When you can't identify the other driver, they're treated as uninsured, and your UM coverage responds.
Some states require specific conditions for hit-and-run coverage, such as reporting the accident to police within a certain timeframe or having corroborating evidence. Check your policy for the exact requirements in your situation.
Understanding Stacking
Stacking is a concept unique to uninsured and underinsured motorist coverage. It allows you to combine, or "stack," coverage limits from multiple vehicles on your policy to increase your total available coverage.
How Stacking Works
Imagine you have two vehicles on your policy, each with 50/100 UM/UIM limits. With stacking allowed, you could combine these limits to access 100/200 in coverage if you're severely injured in a single accident.
Two types of stacking exist:
Horizontal stacking: Combining limits across multiple vehicles on the same policy. The example above demonstrates horizontal stacking.
Vertical stacking: Combining limits from multiple policies on the same vehicle. This applies when household members each have separate policies on different vehicles, but one person is injured while in a family member's car.
State Rules on Stacking
Stacking availability varies by state. Some states require insurers to offer stacking options, some prohibit it entirely, and others leave it to the insurance company's discretion. Where stacking is available, you can often choose to reject it in exchange for lower premiums.
If you live in a state that permits stacking and have multiple vehicles, carrying stacked coverage provides substantially more protection without proportional premium increases. The additional cost of stacking is typically modest compared to the significantly higher coverage limits you gain access to.
UM/UIM Coverage Limits and Costs
In most states, your UM/UIM limits can't exceed your liability limits. If you carry 100/300 liability coverage, you can purchase UM/UIM limits up to 100/300 as well.
The cost of UM/UIM coverage is generally reasonable, especially considering the protection it provides. Adding 100/300 UM/UIM to a policy typically costs between $50 and $200 annually, depending on your location and other factors.
States with higher uninsured motorist rates often have higher UM/UIM premiums because the likelihood of needing this coverage is greater. However, these are also the states where this coverage matters most.
State Requirements Vary
Some states require uninsured motorist coverage, others make it optional but require insurers to offer it, and a few have no specific requirements.
In states where it's required, the minimum amounts typically mirror the state's liability minimums. In states where it's optional, insurers must offer it, and you must explicitly reject it in writing if you choose not to carry it.
Even in states where UM/UIM is optional, carefully consider the protection it provides before declining it. The peace of mind and financial protection often justify the modest cost.
When UM/UIM Becomes Essential
This coverage becomes particularly valuable in certain situations:
You live in a high-uninsured-motorist state: If 20% or more of drivers in your state lack insurance, UM coverage is practically essential.
You have significant assets to protect: If you have savings, property, or investments that could be depleted paying for injuries after an accident, UIM coverage provides crucial protection.
Your health insurance has high deductibles or limited coverage: UM coverage can fill gaps your health insurance might not cover, such as lost wages and pain and suffering.
You frequently carry passengers: UM/UIM coverage extends to passengers in your vehicle, protecting family and friends who ride with you.
Coordinating with Other Coverage
Understanding how UM/UIM works with your other coverage helps you avoid gaps or unnecessary overlap.
If you have collision coverage, you might wonder if you need UMPD. Collision covers vehicle damage regardless of fault, but usually with a deductible. UMPD often has a lower or no deductible, saving you money when an uninsured driver damages your car. If you carry both, UMPD typically pays first, and collision serves as backup.
Your health insurance may cover medical expenses from auto accidents, but it won't cover lost wages, pain and suffering, or costs exceeding your health coverage limits. UM bodily injury coverage fills these gaps comprehensively.
Making the Right Choice
Deciding on UM/UIM coverage involves assessing your risk and financial situation. Consider these factors:
Choose coverage matching your liability limits: If you carry 100/300 liability, purchase 100/300 UM/UIM. This ensures you're as protected from uninsured drivers as those drivers should be from you.
Consider stacking if available: The additional cost is usually modest for the significantly expanded protection, especially if you own multiple vehicles.
Don't skip UIM: While someone might argue that UM isn't necessary if you have comprehensive collision and health coverage, underinsured motorist protection addresses a different risk entirely. State minimum limits are often woefully inadequate for serious accidents.
The Bottom Line
Uninsured and underinsured motorist coverage protects you from a very real risk. With one in eight drivers nationwide lacking insurance, and many others carrying only minimum limits, the odds of being hit by someone who can't fully pay for your damages are higher than most people realize.
This coverage is typically affordable and provides substantial protection against scenarios that could otherwise result in financial devastation. While we can't control whether other drivers carry adequate insurance, we can control whether we're protected when they don't.