Do I need Uninsured Motorists and Underinsured Motorists coverage?

Theoretically, all drivers should be covered by auto insurance. All states except New Hampshire require drivers to have car insurance, and even that state requires drivers to have enough assets to pay for damage and injuries they cause in traffic accidents if they don't have auto insurance coverage.

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Unfortunately, a substantial number of drivers ignore the law or simply can't afford car insurance. If one of those drivers crashes into your car, uninsured motorists coverage pays the medical expenses for any injuries you and your passengers sustain in the accident. Underinsured motorists coverage pays the bills that exceed the liability limits of an underinsured driver. The coverage kicks in only when an uninsured or underinsured driver causes an accident -- not when you're at fault.

Most people usually buy an amount of UM/UIM coverage to match their bodily injury liability limits, but you can buy less. A 50/100 limit for uninsured motorists coverage would mean you could collect up to $50,000 per person in an accident with an uninsured driver and up to $100,000 for all drivers injured in the same accident. In most states, the limit for underinsured motorists coverage applies to the total amount you could collect from both the underinsured driver and your own policy.

In some states you can also purchase coverage known as uninsured motorists property damage. This coverage pays to repair your car if an uninsured motorist causes an accident that damages your vehicle. Remember, though, that car insurance collision coverage pays for damage to your vehicle from traffic accidents in all situations. Uninsured motorists property damage kicks in only if you're hit by an uninsured driver who is at fault. If you have to pick one, collision offers much broader coverage.

For more, see "Uninsured motorists coverage: 8 answers you need."