You might wonder why you, an insured driver, might want uninsured motorist coverage. If you have insurance, who is uninsured motorist coverage covering, exactly? It’s covering you and your family when you’re in your car.
Uninsured motorist coverage pays for your medical bills (and in some cases, your car repairs) if the driver at fault in an accident doesn’t have liability insurance. If you do not have uninsured motorist coverage and your car is hit by an uninsured driver, you will pay for the medical bills and car repairs out of your own bank account. Your insurance company won’t pay for either of these costs, and the other driver doesn’t have an insurance company at all.
Most people do have liability insurance – probably because their state requires them to carry it in order to register their cars and drive legally. Only one state – New Hampshire – has no insurance requirement at all. The other 49 states have insurance minimums that include liability coverage or they have expensive registration requirements for uninsured vehicles. There are penalties for driving without insurance: you can be fined up to $5,000 in many states, and in some cases your license could be suspended.
But that doesn’t mean everybody on the road is properly insured. A recent study found that one in eight drivers in the US is uninsured, and that number is now rising after a seven-year decline. Being involved in an accident with these drivers can be expensive. The average uninsured motorist claim is $20,000 – and that doesn’t include car repairs. That’s just for medical bills, which are more commonly covered by insurance.
Underinsured Motorist Car Insurance
Sometimes, the other driver who causes the accident is underinsured. Who exactly is “underinsured” differs by state, but generally it means the driver who caused the accident either doesn’t have liability insurance to pay for your medical costs at all, or that driver doesn’t have enough insurance to cover the medical costs. Insurance companies often bundle the two types of coverage together as an “uninsured/underinsured motorist” policy.
If you get into an accident, you’ll know immediately if the other driver is uninsured because they will likely tell you when you ask for their insurance information. But it may take time to know if the other driver is underinsured. It will depend on their coverage and the extent of your medical and repair bills. You and your insurance company have to see what the bills are and then find out how much the other driver’s liability coverage will pay.
Some states require uninsured motorist coverage, but in almost all states it's entirely optional. You might consider skipping it to keep your insurance premiums low, but bear in mind that the average claim is $20,000. Without uninsured motorist coverage, you would either have to absorb those costs yourself or sue the other driver, and there’s a good chance an uninsured driver is not sitting on piles of money.
Insurance companies and websites use a lot of acronyms when discussing the different types of uninsured/underinsured motorist coverage. Here are a few of the most common, which we’ll detail in the next section:
- UM: Uninsured Motorist
- UIM: Underinsured Motorist
- UMBI: Uninsured Motorist Bodily Injury
- UIMBI: Underinsured Motorist Bodily Injury
- UMPD: Uninsured Motorist Property Damage
- UIMPD: Underinsured Motorist Property Damage
Laws regarding uninsured and underinsured motorist coverage vary by state. We’ve tried to discuss the most common and typical situations in which uninsured motorist coverage will apply in this article, but you’ll want to check with your state or insurance company for the specific requirements that apply to you.
What Does Uninsured Motorist Car Insurance Cover?
Uninsured motorist coverage almost always applies only to medical bills, though some policies in some states also cover repair bills. These are the most common types of coverage:
Uninsured Motorist Bodily Injury – This policy covers medical expenses for you, your family if they’re on your policy, and any passengers in your car if you're hit by an uninsured driver. Depending on your coverage and your state, it may also cover your medical bills if you’re hit as a pedestrian or while you’re on a bike.
Uninsured Motorist Property Damage – This policy covers car repairs caused by an uninsured driver. Check with your insurance company to see if it’s available and how much it covers. In some states it also covers hit and run damage to your vehicle, as well as damage to other types of property like a fence or your laptop.
Underinsured Motorist Bodily Injury – This is the only coverage available for underinsured coverage in most states. It covers your medical bills only, not any repairs for your vehicle.
In addition to hospital bills, uninsured motorist coverage can include payments for pain and suffering, lost wages, and funeral costs. When you have injuries sustained from an accident with an uninsured driver, uninsured motorist bodily injury (UMBI) coverage will pay your medical bills before your health insurance kicks in to cover any remaining costs. There’s also no deductible for UMBI coverage, though there may be a deductible for uninsured motorist property damage coverage if it is available in your state.
Sometimes, when shopping for uninsured motorist coverage, it will be presented as split limits. There will be one dollar amount for injuries to one person – probably the driver – and a separate limit when multiple people are injured in an accident. For example, your policy might say it covers $15,000 per person who has been injured in the accident or $30,000 total no matter how many people in your vehicle are injured.
What Is Not Covered by Uninsured Motorist Insurance?
In order for uninsured or underinsured motorist coverage to kick in, remember that the other driver has to be at least partially at fault. How much at fault depends on the state, but usually the police report will determine the causes of the accident and which driver was at fault. If an uninsured motorist is less than 50 percent at fault, then your uninsured motorist coverage will not pay for any costs as a result of the accident.
Be aware that you need to file an uninsured motorist claim in a timely manner. Claims filed more than 30 days after the accident will usually not be covered.
Of course, if you’re at fault in the accident, then your liability insurance will cover the other driver's medical and repair costs.
Who Needs Uninsured Motorist Car Insurance?
There are currently 21 states (plus the District of Columbia) that require uninsured motorist bodily coverage, which takes care of your medical bills. Of those, seven states plus D.C. also require uninsured motorist property damage coverage, which takes care of your car repair bills. Underinsured motorist bodily injury coverage is required in 16 states, which means you have to carry insurance to cover what another driver’s insurance won’t cover. Six states require all three types of uninsured/underinsured coverage.
Some states automatically include underinsured motorist coverage in new insurance policies. If you don’t want this coverage, you have to specifically sign paperwork saying you don’t want it.
If you live in a no-fault state like Pennsylvania or New York, you are required to carry personal injury protection, or PIP, insurance. This covers medical expenses for you and anyone in your car, just like uninsured motorist coverage would. So if you have PIP or no-fault insurance, you may not need uninsured or underinsured motorist coverage. Your PIP insurance will take care of those costs in the event of an accident.
How Much Does Uninsured Motorist Insurance Cost?
It can be hard to pin down how much any type of car insurance will cost because so many variables go into determining risk and rates. For most people, uninsured motorist or underinsured motorist coverage costs about 10% of the total premium. As with any insurance policy, if you choose higher limits, your premiums will be more expensive. The added cost is worth it, though, since you'll end up paying far more for medical bills or car repairs if you don't have enough coverage.
The biggest risk factor for uninsured motorist coverage is the likelihood that you’ll be involved in an accident where the driver at fault does not have auto insurance. Therefore, the cost can depend on how many drivers in your state don’t have insurance. Some states, such as Florida and Texas, have higher rates of drivers who don’t carry car insurance. Uninsured motorist coverage in states like these can be quite expensive as there’s a good chance an accident could be caused by a driver without insurance.
Check out our guide on car insurance discounts to find out how you can save money on your premiums.
Do I Need Uninsured Motorist Car Insurance?
As we mentioned, there are more than 20 states that require uninsured motorist bodily injury coverage that will pay for your medical bills. Depending on your state, you might also need uninsured motorist property damage coverage or underinsured motorist coverage. Check with local insurance regulations or your insurance agent to find out what insurance you’re required to carry. Our guide on how much car insurance you need can help, too.
Most drivers choose to have the same uninsured motorist insurance limits as they do for their own liability insurance limits. In this case, you’ll be covered as if the other driver had the same insurance as you, rather than none at all. If you have uninsured motorist property damage coverage, you’ll probably want to set the limit at the value of your car. You don’t want to overpay, but you do want to make sure that your insurance can cover the repairs to your vehicle.
You can’t, however, carry more uninsured/underinsured insurance coverage than the limits in your liability coverage. Insurance companies frown on drivers buying the minimum coverage for their own insurance and then setting high limits on their UM/UIM coverage.
Consider These Scenarios
Let’s start by imagining the most basic scenario: you’re at a four-way intersection. You don’t have a stop sign, but the cross street does. The other driver is new to the neighborhood and doesn’t know that you don't need to stop. He stops, but he also expects you to stop. He starts driving through the intersection at the same time you do and clips the front corner of your car. You instinctively raise your left hand as you see his car coming, and when your airbag deploys, you feel a pain in your wrist.
You both pull to the curb to assess the damage and exchange insurance information. As you dial the police so they can come to the scene and make a report, he sheepishly admits that he doesn’t have insurance. In this case, your uninsured motorist bodily injury coverage will pay the medical bills for having your wrist examined and maybe set if it’s broken.
Few states require uninsured motorist property damage coverage. If you opted to carry this insurance, then you could also file a claim for the repairs to the front bumper and headlight. If you do not have UMPD coverage, you will be paying out of pocket for those repairs. If you do not have any uninsured motorist coverage at all, you will pay out of pocket for both your medical and repair bills.
In the second scenario, the same accident occurs. This time, though, the other driver gets out of the car and exchanges insurance information with you. The police come and take the report, noting that the accident was caused by the driver who clipped your front fender, and a tow truck comes to take your car to your mechanic.
Your wrist, it turns out, is broken in several places and will require surgery, so you’ll be out of work for a few weeks while it heals. The bills add up to $20,000, but it's the responsibility of the other driver’s insurance to pay, right? Well, yes, but it turns out he doesn’t have enough coverage to pay for these medical bills; he only has $15,000 in liability insurance. This is an underinsured motorist. Uninsured motorist coverage will not pay for the costs above the other driver’s insurance. The remaining $5,000 will need to be paid by your own underinsured motorist bodily injury coverage or your health insurance, or it will come out of your pocket.
What about the repairs to your car? They’re pretty extensive, and this driver didn’t carry enough insurance to cover the cost. If you have underinsured motorist property damage coverage, it will pay for any repairs not covered by the other driver’s insurance, though there might be a deductible for you to pay. If you do not have UIMPD coverage, you will pay the difference out of pocket.