FREQUENTLY ASKED QUESTIONS

You’re driving down the road, at the speed limit and obeying all of the rules of the road, of course, when all of the sudden you’re hit from behind or T-boned by another car. Even if the damage is minimal, an accident can be devastating. But, you’re thankful that you can at least rely on the at-fault driver’s auto insurance to foot the bills for any repairs or medical care.

But then horror hits you when you find out that the driver who hit you isn’t insured, or does have insurance, but not enough to cover the cost of the damages!

Protecting Yourself from the Uninsured

While every motorist is legally required to carry car insurance, that doesn’t mean that everyone abides by the law. In fact, according to the National Association of Insurance of Insurance Commissioners (NAIC), approximately 13 percent of all motorists, or one in eight drivers, did not have car insurance in 2014. And even if a driver does carry insurance, if they only have the bare minimum amount of liability coverage that they are required to carry, it might not be enough to cover the cost of the damages.

In other words, if someone else is responsible for an accident and doesn’t have insurance, or doesn’t have enough coverage, you will end up having to pay for the expenses out of your own pocket. Yes, even the other driver was completely at-fault!

Fortunately, there is a way that you can avoid being financially responsible for someone else’s negligence. How? – By purchasing uninsured and/or underinsured motorist coverage (UM/UIM).

But what is uninsured and underinsured motorist coverage? Is there a difference? Below, we’ll explain both types of insurance policies, the difference between them, and they can protect you financially.

What is Uninsured and Underinsured Motorist Coverage

As we mentioned, it’s estimated that 1 in every 8 drivers on US roadways are not insured. If you happen to be one of the unlucky ones who ends up getting into an accident with an uninsured or underinsured driver, you’ll have to pay for the damages yourself, unless you are successful in suing them. But, if you have UM/UIM, you would be protected in this type of scenario. With this type of coverage, your insurance provider would pay for any damages that occurred if the driver who was responsible for an accident wasn’t insured or didn’t have enough insurance.

Now, let’s say you are involved in an accident with another driver and he or she is at-fault. The responsible party does have insurance, but not enough to cover the damages or medical care. You would be responsible for paying whatever the at-fault driver’s policy will not cover. However, if you have UM/UIM, then your insurance provider would kick in and cover the remaining damages that the at-fault driver’s liability coverage won’t cover.

Difference Between UM and UIM

The difference between uninsured motorist coverage and underinsured motorist coverage is as straightforward as their name’s suggest:

  • Uninsured motorist coverage (UM) covers you in case you are involved in an accident with a driver who does not have any auto insurance coverage. These drivers oftentimes are driving illegally, without licenses and registrations. A high percentage of them are not even in the United States legally. Receiving any type of payout from these drivers is next to impossible, which is why having uninsured motorist coverage is vital.
  • Underinsured motorist coverage (UIM) covers you in case you are involved in an accident with a driver who does not have enough insurance coverage. State minimum coverage is usually inadequate. If you get into an accident that causes $50,000 in damages, for example, and the underinsured driver only has $25,000 in coverage, you will be left paying for damage out of pocket unless you have UIM.

Uninsured/Underinsured Motorist Bodily Injury and Property Damage Coverage

Just like traditional liability insurance, uninsured and underinsured motorist insurance covers two distinct areas: bodily injuries and property damages.

Uninsured and underinsured motorist bodily injury coverage (often just referred to as UMBI) is designed to cover the following:

  • Medical care required for any injuries that are sustained when another driver is at-fault and doesn’t carry insurance, or doesn’t have enough insurance.
  • Any wages that you may lose as a result of the injuries you sustained in an accident with an at-fault driver who is uninsured or underinsured

Uninsured and underinsured property damage coverage (simply referred to as UMPD) will cover any property damages if you are involved in an accident and the at-fault driver doesn’t have insurance coverage, or doesn’t have enough coverage. UMPD will help to cover the cost of:

  • Damages that your vehicle may have sustained
  • Damages that your home or place of business may have sustained

Is Uninsured and Underinsured Motorist Coverage Required?

It depends where you live. Currently, there are 20 states that require this type of auto insurance coverage. Typically, UMBI is a requirement in these 20 states, but in some states, you are also required to carry UMPD.

Additionally, the limited amount of coverage required in states where uninsured and underinsured motorist coverage is required varies. Check in with the Department of Motor Vehicles in your state or consult with a reputable insurance agent to find out if this type of coverage is required where you live, and if so, how much.

Is Uninsured and Underinsured Motorist Coverage a Wise Investment If It’s Not Required?

Yes! Even if your state doesn’t require this type of coverage, it is a very good idea to invest in it. Why? – Because if you are involved in an accident with someone who doesn’t have enough insurance, or any insurance at all, your policy will help to pay for the damages and medical bills. The cost of premiums for this type of policy is far less expensive than the amount you will have to pay out if you are involved in an accident with an uninsured or underinsured motorist.