Car Accidents

Understanding the Basics of Uninsured and Underinsured Motorist Insurance

According to the Insurance Research Council, approximately 14% of licensed drivers in the U.S. are either uninsured or underinsured. In real numbers, that’s 1 in 8 drivers or more than 38 million people. Unfortunately, with car insurance costs constantly on the rise, those numbers are increasing at an alarming rate.

However, you can protect yourself by carrying uninsured motorist (UM) and underinsured motorist (UIM) insurance. These coverages are designed to provide financial protection if you are involved in an accident with a driver who either has no insurance or insufficient insurance to cover the damages.

Uninsured Motorist Coverage (UM)

UM is a type of car insurance that covers the bodily injury aspect of an accident caused by:

• A driver who doesn’t have any liability car insurance
• A hit-and-run driver
• A driver whose insurance company denies coverage or goes out of business

There are two different UM categories:

• Uninsured Motorist Bodily Injury (UMBI) coverage can pay for:
  • Medical bills
  • Lost wages
  • Pain and suffering
  • Funeral expenses
• Uninsured Motorist Property Damage (UMPD) covers the property damage aspect of an accident.

Underinsured Motorist Coverage (UIM)

Underinsured Motorist (UIM) insurance is identical to uninsured motorist coverage but comes into play when the at-fault driver has insurance, but their coverage limits are too low to fully cover the costs of the damages. UIM is there to bridge the gap in coverage.

Why is UM and UIM Coverage Important?

• Financial Protection: Medical bills, vehicle repairs, and lost wages can quickly add up after an accident. UM and UIM coverage provide a financial safety net, ensuring you aren’t left to cover these expenses out of pocket.
• Higher Likelihood of Encounter: While the national average of uninsured/underinsured drivers hovers around 14%, the rate is even higher in some states. This means the chances of being in an accident with an uninsured or underinsured driver are substantial.
• Legal Protection: In some cases, pursuing legal action against an uninsured or underinsured driver may not result in full compensation due to their lack of assets. UM and UIM coverage may help you receive the compensation you deserve without the hassle of lengthy legal battles.

*It is important to note that car insurance requirements vary state by state, as do the laws governing the availability & costs of uninsured/underinsured coverage. You can find a comprehensive breakdown of costs, parameters and state-by-state laws around UM/UIM coverage here.