Car accidents are an unfortunate reality that drivers face, and when they occur, insurance helps cover the costs of repairs, medical bills, and other damages. However, not all accidents involve drivers who have adequate insurance to cover the expenses. This is where uninsured motorist (UM) and underinsured motorist (UIM) coverage come into play. These types of coverage provide protection when you’re involved in an accident with a driver who either doesn’t have insurance or doesn’t have enough insurance to cover the damages.
In this article, we’ll explore what uninsured and underinsured motorist coverage are, how they work, and why they are important for drivers to consider when purchasing car insurance.
What is Uninsured Motorist Coverage?
Uninsured motorist (UM) coverage is a type of car insurance that protects you if you’re involved in an accident with a driver who does not have any insurance at all. Even though it’s illegal to drive without insurance in many states, a surprising number of drivers still operate vehicles without adequate coverage. In the event of an accident with an uninsured driver, you could be left to pay for your injuries or vehicle damage out of your own pocket unless you have uninsured motorist coverage.
There are two primary components of uninsured motorist coverage:
- Uninsured Motorist Bodily Injury (UMBI): This covers medical expenses and other costs related to injuries sustained in an accident caused by an uninsured driver. It can help pay for medical bills, lost wages, rehabilitation, pain and suffering, and funeral expenses, depending on the severity of the injuries.
- Uninsured Motorist Property Damage (UMPD): This covers damage to your vehicle or personal property caused by an uninsured driver. It will pay for repairs or replacement of your vehicle if it’s damaged in an accident with an uninsured driver.
What is Underinsured Motorist Coverage?
Underinsured motorist (UIM) coverage works similarly to uninsured motorist coverage, but it comes into play when the at-fault driver does have insurance, but their coverage is insufficient to cover the full extent of your damages.
In other words, if you’re in an accident and the other driver has insurance, but their policy limits aren’t enough to pay for your medical expenses, lost wages, and vehicle damage, underinsured motorist coverage will step in to cover the difference. Underinsured motorist coverage can be divided into two main types:
- Underinsured Motorist Bodily Injury (UIMBI): This covers the medical expenses, lost wages, and pain and suffering associated with injuries you sustain in an accident caused by an underinsured driver. It ensures that you aren’t left financially burdened due to the other driver’s inadequate coverage.
- Underinsured Motorist Property Damage (UIMPD): This covers the cost of repairing or replacing your vehicle if it’s damaged by an underinsured driver. If the at-fault driver’s insurance doesn’t cover the full cost of repairs, your UIMPD coverage will help make up the difference.
How Do Uninsured and Underinsured Motorist Coverage Work?
In a typical car accident, the at-fault driver’s insurance should cover your medical expenses, vehicle repairs, and other costs related to the incident. However, if the at-fault driver is uninsured or underinsured, you would either have to pay these costs yourself or rely on your own car insurance policy to cover the expenses.
Here’s where UM and UIM coverage come in:
- Uninsured Motorist Coverage: If you’re hit by a driver with no insurance, you can file a claim under your uninsured motorist coverage. Your insurer will cover the expenses up to the limits of your policy.
- Underinsured Motorist Coverage: If the at-fault driver has insurance but their coverage isn’t sufficient to pay for your medical bills or car repairs, you can file a claim under your UIM coverage to cover the remaining costs. Your insurer will pay the difference between what the at-fault driver’s insurance covers and the total amount you owe.
Why Should You Consider Uninsured and Underinsured Motorist Coverage?
Having UM and UIM coverage can provide significant benefits and peace of mind, especially in states with high numbers of uninsured or underinsured drivers. Here are a few key reasons why it’s worth considering:
1. Protection Against Uninsured Drivers
In many parts of the country, a significant number of drivers operate their vehicles without adequate insurance coverage. According to the Insurance Information Institute (III), approximately 13% of drivers in the United States were uninsured as of 2019. This figure varies by state, with some areas having much higher rates of uninsured drivers.
Without uninsured motorist coverage, if you are involved in an accident with an uninsured driver, you could be left to pay for your injuries, repairs, or other damages out of pocket. UM coverage ensures that you aren’t financially responsible for the full costs of an accident caused by an uninsured driver.
2. Filling the Gaps Left by Underinsured Drivers
Even if the at-fault driver has insurance, it may not be enough to cover all of your costs. This is especially true in severe accidents where medical bills or property damage can quickly exceed the other driver’s policy limits. Underinsured motorist coverage ensures that you won’t be left with an unpaid balance if the other driver’s insurance isn’t sufficient to cover your expenses.
3. Peace of Mind
Knowing that you have UM and UIM coverage gives you peace of mind, especially when driving in areas where the likelihood of encountering uninsured or underinsured drivers is higher. It allows you to drive confidently, knowing that you are financially protected if something goes wrong.
4. Cost-Effective Protection
Uninsured and underinsured motorist coverage is generally inexpensive to add to your policy. The extra cost is relatively low compared to the protection it offers. Considering the high costs of medical treatment and vehicle repairs, the small additional cost of UM and UIM coverage is often a worthwhile investment.
5. Coverage in Hit-and-Run Accidents
In some cases, a driver may flee the scene of an accident before exchanging insurance information. If the at-fault driver cannot be located, uninsured motorist coverage can still provide protection for your injuries and damages. In hit-and-run accidents, UM coverage steps in to help cover the costs if the driver cannot be identified or doesn’t have insurance.
States Where Uninsured and Underinsured Motorist Coverage is Required
While uninsured motorist coverage is mandatory in many states, the requirements for underinsured motorist coverage can vary. Some states require both UM and UIM coverage, while others may offer them as optional coverage. Here’s a breakdown of how each state approaches UM and UIM coverage:
- Mandatory UM Coverage: Some states, including New York, Michigan, and Maine, require that drivers carry uninsured motorist coverage as part of their auto insurance policy.
- Mandatory UIM Coverage: In states like Connecticut, Illinois, and Oregon, underinsured motorist coverage is either mandatory or required as an option on your policy.
- Optional UM and UIM Coverage: In other states, such as California and Florida, both UM and UIM coverage are optional. While it’s not required by law, it’s still highly recommended to add this coverage to your policy for extra protection.
How Much Uninsured and Underinsured Motorist Coverage Do You Need?
The amount of UM and UIM coverage you need depends on several factors, including the value of your vehicle, your health insurance coverage, and your financial situation. In general, it’s recommended to have the same limits for UM and UIM coverage as your liability coverage. This ensures that you have adequate protection in the event of an accident.
If you’re unsure about how much coverage you need, consider discussing your options with your insurance agent. They can help you determine the appropriate amount of coverage based on your unique circumstances and risk factors.
Conclusion
Uninsured and underinsured motorist coverage plays a vital role in protecting you from the financial consequences of accidents involving drivers who lack adequate insurance. Whether the at-fault driver is uninsured or their insurance is insufficient to cover your costs, UM and UIM coverage ensures that you are not left to pay for damages out of pocket.
Given the relatively low cost of adding these coverages to your policy and the significant peace of mind they provide, it’s highly advisable for drivers to consider adding uninsured and underinsured motorist coverage to their car insurance policy. It’s a simple way to protect yourself, your passengers, and your vehicle in the event of an accident with an at-fault driver who can’t fully cover your costs.