Why Uninsured/Underinsured Motorist (UM/UIM) Coverage is Essential

Even if you're a safe driver and carry adequate auto insurance, you can still face significant financial hardship if you're hit by a driver who has no insurance or not enough insurance to cover your damages. This is where Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverages become invaluable. They are designed to protect you and your passengers when the at-fault driver can't pay.

What is Uninsured Motorist (UM) Coverage?

Uninsured Motorist (UM) coverage steps in to cover your expenses if you're injured in an accident caused by a driver who has no auto liability insurance. It can also apply in hit-and-run situations where the at-fault driver cannot be identified.

UM coverage typically comes in two parts:

  1. Uninsured Motorist Bodily Injury (UMBI): This covers medical expenses, lost wages, and pain and suffering for you and your passengers if you're injured by an uninsured driver. It essentially takes the place of the liability insurance the at-fault driver should have had.
  2. Uninsured Motorist Property Damage (UMPD): This covers damage to your vehicle if it's hit by an uninsured driver. In some states, UMPD may have a deductible or may not be available if you also have collision coverage (as collision would cover the damage regardless of who is at fault, though you'd pay your collision deductible).

What is Underinsured Motorist (UIM) Coverage?

Underinsured Motorist (UIM) coverage protects you when the at-fault driver has liability insurance, but their policy limits are too low to cover all of your medical bills or vehicle damage. UIM coverage bridges the gap between the at-fault driver's low coverage amount and the actual cost of your damages, up to the UIM limits you selected on your policy.

Like UM coverage, UIM coverage also typically has bodily injury (UIMBI) and property damage (UIMPD) components, though availability and specifics vary by state.

Example of UIM in Action:

  • You are seriously injured in an accident caused by another driver.
  • Your medical bills total $100,000.
  • The at-fault driver has bodily injury liability limits of only $25,000 per person.
  • If you have UIMBI coverage with a limit of $100,000, your UIM coverage could pay the remaining $75,000 ($100,000 total bills - $25,000 paid by at-fault driver's insurance).

Why is UM/UIM Coverage So Important?

  1. High Number of Uninsured Drivers: Despite laws requiring auto insurance, a significant percentage of drivers on the road are uninsured. The Insurance Research Council (IRC) estimates that about 1 in 8 drivers in the U.S. is uninsured.
  2. Many Drivers Carry Only State Minimums: Even if a driver is insured, they might only carry the minimum liability coverage required by their state. These minimums are often insufficient to cover serious injuries or substantial vehicle damage (as discussed in Understanding Auto Liability Limits).
  3. Protection for You and Your Passengers: UM/UIM directly benefits you, your family members living with you, and other passengers in your car. It ensures you have a source of recovery for injuries and damages when the responsible party can't pay.
  4. Covers Hit-and-Run Accidents: In many states, UM coverage can apply if you're a victim of a hit-and-run driver who flees the scene and cannot be identified.
  5. Peace of Mind: Knowing you have UM/UIM coverage provides peace of mind that you're protected against the irresponsibility of other drivers.

Doesn't My Health Insurance Cover Medical Bills?

While your health insurance will likely cover a portion of your medical bills, it won't cover everything that UM/UIMBI can:

  • Deductibles and Co-pays: You'll still be responsible for your health insurance deductibles, co-payments, and co-insurance.
  • Lost Wages: Health insurance does not cover lost income if you're unable to work due to your injuries.
  • Pain and Suffering: Health insurance does not compensate you for pain, suffering, disfigurement, or long-term disability resulting from the accident.
  • Out-of-Network Providers: Your health plan might have limitations on which doctors or hospitals you can use.

UM/UIMBI can help cover these gaps.

How Much UM/UIM Coverage Should You Get?

Many insurance experts recommend that you carry UM/UIM limits that are equal to your own bodily injury liability limits. If you've determined that $100,000/$300,000 is appropriate to protect your assets if you cause an accident, it makes sense to have the same level of protection if someone else injures you and can't pay.

In some states, UM/UIM coverage is mandatory, while in others it's optional (though highly recommended). Some states also have specific rules about how UM/UIM coverage can be "stacked" (combining limits from multiple vehicles on a policy) to increase your total available coverage.

Key Takeaways

  • UM coverage protects you from drivers with no insurance.
  • UIM coverage protects you from drivers with insufficient insurance.
  • These coverages are crucial due to the high number of uninsured/underinsured drivers.
  • They cover medical expenses, lost wages, pain and suffering, and sometimes property damage.
  • It's generally wise to match your UM/UIM limits to your own liability limits.

Don't underestimate the risk of encountering an uninsured or underinsured motorist. Review your auto insurance policy to ensure you have adequate UM/UIM protection. It's a relatively inexpensive coverage that can save you from financial disaster.

Concerned about your current coverage? Get a personalized auto insurance quote and review your UM/UIM options today!