If somebody hits your car, you might expect any damages to be covered by the other driver’s auto insurance. But according to ValuePenguin, around one in every eight drivers — or 13% of people on the road — are uninsured. And even when the other driver is insured, it doesn’t mean they have enough insurance to pay for the damages they cause.
That’s where uninsured and underinsured motorist coverage comes in. These important coverages exist to help pick up the tab when you’ve been hit by another driver who either has no coverage or too little coverage.
When it comes to auto insurance, money expert Clark Howard says you need to have uninsured/underinsured motorist coverage. This article will explain why and answer common questions about these coverages, including:
- What Is Uninsured/Underinsured Motorist Coverage?
- What’s The Difference Between Uninsured and Underinsured Motorist Coverage?
- How Does Uninsured/Underinsured Motorist Coverage Work?
- Who Needs Uninsured/Underinsured Motorist Coverage?
- How Much Is Uninsured/Underinsured Motorist Coverage?
What Is Uninsured/Underinsured Motorist Coverage?
Uninsured motorist coverage (UM) and underinsured motorist coverage (UIM) are additional types of protection you can add to your auto insurance policy. These coverages typically offer protection in the following types of situations:
- You’re hit by a driver who does not carry any liability insurance.
- You’re hit by a driver who flees the scene.
- You’re hit by a driver who carries state minimum liability insurance, but the cost of damages and/or medical bills exceeds what the at-fault driver carries.
Uninsured and underinsured motorist coverages are unique because — even though you pay for them — they protect you when you’ve been hit by somebody else. This idea might make the coverage seem unnecessary or even unfair. But you should think twice before you skip adding them to your policy. Clark says:
“When you buy auto insurance, it’s common that you’re looking to shave every dollar you can from the premium. So, a lot of people buying auto insurance will ignore [uninsured motorist coverage], which is actually one of the most important things for you to have as part of your policy.”
What’s The Difference Between Uninsured and Underinsured Motorist Coverage?
Auto insurance is regulated at the state level. So, depending on where you live, your state may have slightly different ways of defining or distinguishing between uninsured and underinsured motorist coverages. But essentially, the differences come down to this:
- Uninsured motorist coverage protects you when you’re hit by someone who doesn’t carry any liability insurance; this includes hit-and-run events when a driver cannot be identified/located and held accountable for the costs of damages and/or medical expenses resulting from the accident they cause.
- Underinsured motorist coverage protects you when you’re hit by someone who does have insurance, but their policy coverage limits are too low to pay for all the damages and/or medical expenses resulting from the accident they cause.
Again, where you live plays a role in how these coverages are defined. You might find that you can purchase each type of coverage separately or that both coverages are lumped together as a package.
How Does Uninsured/Underinsured Motorist Coverage Work?
Let’s say you have uninsured/underinsured motorist coverage on your auto policy. Your insurance will kick in to help cover the costs of damages and/or medical expenses if you’re hit by a driver who meets the criteria for being uninsured or underinsured.
There are two basic parts of uninsured/underinsured motorist coverage, including:
- Bodily Injury: pays medical expenses for you and any of your passengers after an accident; may also cover lost wages and other injury-related expenses
- Property Damage: pays to replace your car or repair damage to your car after an accident; depending on your policy, this may not always include compensation for damages resulting from hit-and-run accidents
With uninsured/underinsured motorist coverage, your auto insurance policy can pay for damages and medical expenses if you’re hit by someone who doesn’t have insurance/enough insurance.
Of course, even with these coverages, your policy will only pay up to your coverage limits. As with liability coverage, you might see uninsured/underinsured coverage listed as three different numbers/three parts on your auto policy.
Consider this: 50/100/50. The first number represents the coverage limit in thousands (ex: 50 = $50,000) for bodily injury per person. The second number is the coverage limit for bodily injury per accident. And the third number is the coverage limit for property damage. So, with 50/100/50 uninsured/underinsured coverage on your auto policy, your coverage limits are between $50,000 – $100,000.
Not sure how much coverage to get? Check out our guide on how much car insurance you need. And keep reading to see if uninsured/underinsured motorist coverage is something you should add to your policy.
Who Needs Uninsured/Underinsured Motorist Coverage?
Nobody wants to get hit by another driver. But when it happens, the best of these unfortunate situations will involve minimal damage and responsible, insured parties. The good news is that there are more people with car insurance than without. The bad news is that a lot of drivers only carry state-minimum car insurance.
State minimum insurance means that a driver has the lowest coverage limits allowed by their state. While it’s more likely that you’ll be hit by someone with state minimums than no insurance at all, that’s no cause for celebration. Clark warns:
That’s why having uninsured/underinsured motorist coverage is so important and why Clark recommends that every driver have it.
State Requirements
Many states are aware of the costs and challenges resulting from drivers who are uninsured/underinsured. Drivers are required to have uninsured/underinsured motorist coverage in several states across the country. Here’s a list of where each state stands:
| States That REQUIRE Uninsured/Underinsured Motorist Coverage | States That DON’T Require Uninsured/Underinsured Motorist Coverage |
| • Connecticut • Illinois • Kansas • Maine • Maryland • Massachusetts • Minnesota • Missouri • Nebraska • New Hampshire • New York • North Carolina • North Dakota • Oregon • South Carolina • South Dakota • Vermont • Virginia • Washington, D.C. • West Virginia • Wisconsin | • Alabama • Alaska • Arizona • Arkansas • California • Colorado • Delaware • Florida • Georgia • Hawaii • Idaho • Indiana • Iowa • Kentucky • Louisiana • Michigan • Mississippi • Montana • Nevada • New Jersey • New Mexico • Ohio • Oklahoma • Pennsylvania • Rhode Island • Tennessee • Texas • Utah • Washington • Wyoming |
Want to know what else your state requires? You can check out minimum insurance requirements by state here.
Some states are increasing their minimum requirements — for liability and/or uninsured/underinsured motorist coverage — as they deal with the devasting costs of accidents caused by drivers who either have state minimums or no insurance at all.
Even if your state doesn’t require this additional coverage, here at Team Clark we recommend having the extra protection that uninsured/underinsured motorist coverage offers.
How Much Is Uninsured/Underinsured Motorist Coverage?
Using data from Quadrant Information Services, Forbes found the average annual cost for uninsured motorist bodily injury coverage is $136. This cost is based on bodily injury coverage limits of $100,000 per person and $300,000 per accident. For uninsured motorist property damage coverage, the average cost per year is $36. The coverage limit for property damage was not disclosed. When combined, these coverages cost a total of $172 annually (or $14 monthly).
As with all types of insurance, however, what you pay is impacted by many different factors. This can include things like where you live, what you drive, your age, marital status and more.
The percentage of uninsured drivers in your state also plays a big role in just how much uninsured/underinsured motorist coverage costs where you live. These are the top five states with the highest and lowest rates of uninsured drivers:
| Highest Rate of Uninsured Drivers | Lowest Rate of Uninsured Drivers |
| 1. Mississippi (29.4%) 2. Michigan (25.5%) 3. Tennessee (23.7%) 4. New Mexico (21.8%) 5. Washington (21.7%) | 1. New Jersey (3.1%) 2. Massachusetts (3.5%) 3. New York (4.1%) 4. Maine (4.9%) 5. Wyoming (5.8%) |
To pay less for uninsured/underinsured motorist coverage, opt for lower coverage limits. And remember — depending on where you live — these coverages may already be a package deal.
Final Thoughts
Uninsured/underinsured motorist coverage is a necessary add-on to your auto insurance policy. You never know what other drivers have going on, and you can’t depend on them to look out for you. Clark says:
Even drivers who mean well and carry state minimums may fall short after causing an accident. Uninsured/underinsured motorist coverage helps ensure that you’ve got the best protection for you, your passengers and your property.
