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Uninsured and underinsured motorist coverage

By Posted : 12/17/2015

As a responsible driver, you have auto insurance to protect yourself in the event of an accident. But not everyone is so conscientious. If you lack uninsured/underinsured (UM/UIM) auto insurance, you can be at financial risk should you ever hit by an uninsured motorist or by someone without adequate coverage. A much more common occurrence than you might think. The National Association of Insurance Commissioners reports that 12.6 percent, or one in eight drivers, are uninsured.

"Let's say you're driving to the store today and some 19-year old [without insurance] plows into the side of your car," says Dave Emmette, a risk manager with AIC Insurance in Ada, Michigan. That's the type of scenario that plays out across the country every day, and in many cases, those who are hit by an uninsured driver may find they are stuck with expensive medical bills and other costs.

That is, unless they have uninsured or underinsured motorist coverage. Emmette says its affordable insurance that should be a part of everyone's policy. "I never, ever do a policy without it," he says. "Why would I want to? I want to have some recourse."

Let us help guide you through the cost, purchase decision and more.

What is uninsured/underinsured motorist coverage?
Do I need uninsured motorist insurance?
How much does uninsured motorist insurance cost?
What are the typical coverage limits?
Stacking uninsured motorist coverage
How does uninsured/underinsured motorist coverage work?

What is uninsured/underinsured motorist coverage?

Uninsured motorist coverage is protection related to injuries received as a result of an uninsured, negligent driver. An uninsured driver is someone who did not have any insurance, had insurance that did not meet state-mandated minimum liability requirements, or whose insurance company denied their claim or was not financially able to pay it. A hit and run driver also counts as uninsured as it relates to bodily injury (UMBI).

Underinsured motorist coverage is protection related to injuries received from an accident where the other driver is at fault has coverage limits too low to cover your expenses. Underinsured drivers purchase only the minimum coverage required by law, which in some states isn't much. For example, California only requires drivers to carry $15,000 per person and $30,000 per incident of bodily injury liability coverage. If a driver with low coverage limits causes you to sustain a serious injury, it is possible that the available insurance benefit won't pay all your medical expenses. This is the definition of an "underinsured" driver.

Should you be involved in an accident where the "at fault" driver lacks adequate liability insurance, your own underinsured motorist coverage covers you.

Uninsured/underinsured motorist coverage refers to two separate but similar coverages:

Uninsured Motorist coverage (UM): This coverage can be divided into Uninsured Motorist Bodily Injury (UMBI) and Uninsured Motorist Property Damage (UMPD). However, UMPD is not available in all states, and when the term UM is used, it often refers to only bodily injury coverage.

  • UMBI can pay for injuries to people protected under your policy -- including family members in other cars and passengers in your insured cars -- resulting from a car accident caused by an uninsured driver. In addition to paying medical bills, UMBI may cover lost income as well as pain and suffering.
  • UMPD can pay for damage to your car by an uninsured driver you can identify, but almost never a hit-and-run driver. If you have the option of purchasing UMPD and collision coverage, UMPD usually pays your collision deductible only (so it may not be worth carrying the coverage if you have collision coverage already).

Underinsured Motorist (UIM): This can pay for injuries the same way UMBI does. At fault drivers who carry only the minimum liability insurance may come up short in the event of a serious accident. With UIM auto insurance, you receive protection in the event that the at-fault driver's insurance fails to cover all your damages.

In some states, UM and UIM are bundled together as coverage, in others they can be bought separately.

Do I need uninsured motorist insurance?

Yes. You should have it because in some states it's required and certain states have more uninsured drivers than others. Review our table below, showing states where UM is required.

All states, except New Hampshire, require drivers to maintain some type of auto insurance, but not everyone follows the law. Despite efforts by states to curb the number of uninsured motorists on the roads, the Insurance Research Council found 12.6 percent of drivers nationwide were driving without coverage in 2012, the last year for which data is available.

All told, 29.7 million people were uninsured during that year with these states having the greatest percentages of uninsured drivers:

  • Oklahoma: 25.9 percent
  • Florida: 23.8 percent
  • Mississippi: 22.9 percent
  • New Mexico: 21.6 percent
  • Michigan: 21.0 percent
  • Tennessee: 20.1 percent
  • Alabama: 19.6 percent
  • Rhode Island: 17.0 percent
  • Colorado: 16.2 percent
  • Washington: 16.1 percent
  • Texas: 13.5 percent

Massachusetts had the smallest percentage of uninsured drivers, with only 4 percent being without coverage in 2012.

Nationwide, approximately one in eight drivers is uninsured. However, in some states, as many as one in four or one in five cars on the road is driven by someone without coverage.

If you have a run in with an uninsured motorist, it can leave you paying for your own injuries or vehicle's damages and going to court to see compensation. A much easier route is to carry uninsured motorist insurance as part of your car insurance policy and make a claim for your damages.

Your existing insurance company may not be the best solution for uninsured/underinsured coverage. Use our effective online tool to easily compare auto insurance quotes from different auto insurance carriers. One form, multiple quotes. Start now.

Is uninsured motorist coverage required?

Uninsured motorist insurance is not always required, but it is wise to carry it since it doesn't add that much to your monthly premium.

UM and UIM coverage is voluntary in more than half of U.S. states, but some do require their drivers have it. The following chart lists the states with uninsured drivers' insurance requirements and indicates the type of coverage that is mandated, as of 2015.

State requirements are shown for uninsured motorist, bodily injury (BI), uninsured motorist property damage (UMPD) coverage, and underinsured motorist property damage (UMIPD) coverage along with required coverage limits, as of 2015.

States with UM and/or UIM requirements

UM required

Estimated percent UM

BI needed with:

UMBI limits

UMPD required

UM and/or UMI PD limits

Connecticut

8.0%

UM/UIM

$20,000/$40,000

Illinois

13.3%

UM

$25,000/$50,000

Kansas

9.4%

UM/UIM

$25,000/$50,000

Maine

4.7%

UM/UIM

$50,000/$100,000

Maryland

12.2%

UM/UIM

$30,000/$60,000

X

UMPD $15,000

Massachusetts

3.9%

UM/UIM

$20,000/$40,000

Minnesota

10.8%

UM/UIM

$25,000/$50,000

Missouri

13.5%

UM

$25,000/$50,000

Nebraska

6.7%

UM/UIM

$25,000/$50,000

New Hampshire

9.3%

UM/UIM

$25,000/$50,000

New Jersey

10.3%

UM/UIM

$15,000/$30,000

X

UMPD $5,000

($500 deductible)

New York

5.3%

UM

$25,000/$50,000

North Carolina

9.1%

UM

$30,000/$60,000

X

UMPD $25,000

($100 deductible)

North Dakota

5.9%

UM/UIM

$25,000/$50,000

Oregon

9.0%

UM

$25,000/$50,000

Rhode Island

17.0%

UM*

$25,000+/$50,000+

X

UMPD $25,000

South Carolina

7.7%

UM

$25,000/$50,000

X

UMPD $25,000

($200 deductible)

South Dakota

7.8%

UM/UIM

$25,000/$50,000

Vermont

8.5%

UM/UIM

$50,000/$100,000

X

UMPD $10,000

($150 deductible)

Virginia

10.1%

UM/UIM

$25,000/$50,000

X

UM/UMIPD $20,000 ($200 deductible)

Washington, D.C.

11.9%

UM

$25,000/$50,000

X

UMPD: $5,000

($200 deductible)

West Virginia

8.4%

UM

$20,000/$40,000

X

UM/UMIPD $10,000

(300 deductible)

Wisconsin

11.7%

UM

$25,000/$50,000

*Required if policy holder chooses to purchase limits higher than $25,000/$50,000.

Source: Insurance Information Institute

Only 22 states and the District of Columbia have UM and/or UIM coverage requirements. Insurance mandates appear unrelated to the estimated percentage of uninsured motorists by state. Whether or not you add UM/UIM coverage may depend on the coverage cost; be sure to consider whether or not you can afford to go without this important and inexpensive insurance.

How much does uninsured motorist insurance cost?

UM/UIM insurance costs approximately 5% of your annual auto insurance premium. For example, if an annual auto insurance premium costs $800, adding UM/UIM insurance may approximate and additional $40 per year. The cost can depend on a number of factors, including (ticket history, prior claims and policy discounts. Emmette defines the price as "nominal" and says motorists may find, as a rough estimate, it adds around five percent to an annual premium's cost.

Since the answer can vary wildly, the best way to learn the cost of UM and UIM insurance is to compare car insurance quotes from several companies.

What are the typical coverage limits?

As with the other components of auto insurance, consumers can select from a variety of coverage levels. Availability may depend upon the insurer and state, but coverage limits could be as little as $5,000 and run to $1 million or more.

uninsured quote

Emmette recommends consumers select a UM limit that mimics their bodily injury limit. "If your bodily injury limit is $500,000, your uninsured coverage should be the same," he says. What's more, some insurers may limit you to UM coverage that is no greater than your other liability limits.

Incidentally, $500,000 is the amount of coverage Emmette recommends to his clients. That's based upon litigation trends he sees in Michigan, where no-fault insurance laws generally require people to go to court to collect on UM claims. "If you look at the average lawsuit [awards] in Michigan, they are hovering above $300,000."

He adds it doesn't matter the size of the court award, drivers will only be compensated by insurers up to their policy limit. "Say a jury awards you $400,000, but your policy is for $100,000," Emmette says. "You get $100,000."

Typically UM and UIM limits are split limits written the same as your liability limits, per person and per incident. So, if you have 100/300 coverage, it means $100,000 per person and $300,000 per incident. If you buy combined single limits, it would be of $300,000 and you could split among one or multiple people the limit as need be.

In states offering uninsured or underinsured motorist property damage coverage, consumers may have the choice to buy UM insurance as a split limit or combined single limit policy.

  • Split limit plans have separate coverage levels for UMBI and UMPD. For example, they may be written as $50,000/$100,000/$25,000, providing coverage of $50,000 per person, subject to a maximum of 100,000 per accident for Bodily Injury and 25,000 for property damage.
  • Combined single limit plans are offered in a small number of states, where one coverage level can pay for both UMBI and UMPD. For instance, a $100,000 policy will pay for up to that amount of UM claims, regardless of whether or not they are related to bodily injury or property damage.

Combined single limit policies are more flexible, but split limit plans may be less expensive.

Stacking uninsured motorist coverage

In some, but not all, states you can elect to stack your uninsured motorist bodily injury and/or underinsured motorist bodily injury coverage. With stacking, you typically pay a bit more for the ability to raise your limits by the number of vehicles you have insured in your household.

For example:

Jane has two cars in her household. Each vehicle has UMBI limits of 100/300, so if she needed to use her coverage, Jane and her passengers could receive $100,000 per person and her limits would top out at $300,000 per incident. Instead, if Jane stacked her UMBI coverages, her limits would double to 200/600. If she had three cars and stacked all the coverage, she could have 300/900 in UMBI coverage.

In general, there is no limit on the number of vehicles that can be insured and whose UMBI coverages are stacked. If you only have one car on your policy, then stacking is not an option for you, but if you have multiple vehicles, stacking can be one of the perks of multi-car insurance.

If your state allows stacking, be aware that not all car insurance companies offer a stacking option.

How does uninsured/underinsured motorist coverage work?

The process depends on your state. Those who live in states with no-fault insurance laws may have to go to court for a judgment before they receive UM or UIM benefits.

In other states, the process for underinsured motorist claims may follow this flow:

How uninsured motorist coverage works

Filing an uninsured/underinsured motorist claim, steps detailed

  1. You are hit by an underinsured motorist.
  2. You file a claim for coverage with the at-fault party's insurance company as soon as possible.
  3. If you believe the motorist is underinsured, you may also want to contact your insurance company to notify them of the situation.
  4. Your insurance company may open a claim immediately, or they may wait until the other party's insurer has responded to your claim.
  5. If the other party's insurance company is unable to pay all of your claim (or the other driver is uninsured), your insurance company will begin their own investigation.
  6. Once the investigation is complete, you should receive compensation based upon your policy limits if your claim is deemed valid. In states with comparative negligence, your claim may be prorated to reflect the level of fault you shared in the accident.

If your insurer denies your claim or fails to offer what you believe is the appropriate amount, you may be able to go to arbitration or take legal action on the matter.

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