When you’re involved in a car accident, you typically rely on the at-fault driver’s insurance to cover any damages or medical expenses. But what happens if the driver doesn’t have insurance or doesn’t have enough to cover the costs? This is where Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage come into play.
These coverage types are designed to protect you if you’re hit by someone who either doesn’t have insurance or doesn’t carry enough to cover the full extent of the damage. In this article, we’ll explain how uninsured and underinsured motorist coverage works, why you need it, and how much you should consider purchasing.
What Is Uninsured Motorist (UM) Coverage?
Uninsured motorist coverage helps protect you if you’re in an accident with a driver who doesn’t have any insurance. Despite laws requiring drivers to have liability insurance. many people still drive without coverage. According to the Insurance Research Council. roughly 1 in 8 drivers in the U.S. are uninsured, making UM coverage critical for your protection.
What Does UM Cover?
- Medical expenses for you and your passengers if the uninsured driver is at fault.
- Lost wages if you’re unable to work due to accident-related injuries.
- Pain and suffering resulting from the accident.
- Funeral costs in the event of a fatality.
UM coverage often applies to hit-and-run accidents as well. If the at-fault driver flees the scene and can’t be identified, uninsured motorist coverage can step in to cover your expenses.
What Is Underinsured Motorist (UIM) Coverage?
Underinsured motorist coverage comes into play when the at-fault driver has insurance, but their policy limits aren’t high enough to cover all of your expenses. With rising medical and repair costs, it’s not uncommon for damages to exceed the minimum liability limits carried by some drivers.
What Does UIM Cover?
- Medical expenses that exceed the at-fault driver’s liability limits.
- Ongoing care or rehabilitation if your injuries require long-term treatment.
- Lost income if you can’t work for an extended period due to injuries.
- Additional damages for pain and suffering if the other driver’s coverage falls short.
For example, if the at-fault driver’s insurance has a bodily injury limit of $25,000, but your medical bills total $50,000, their policy will cover only the first $25,000. Your UIM coverage would step in to cover the remaining $25,000, up to your policy’s limits.
Why Do You Need UM/UIM Coverage?
While auto insurance is mandatory in most states, not every driver follows the law, and many who do may carry only the minimum required coverage. This creates a risk for you, especially if you’re in an accident with a driver who can’t fully compensate you for damages. Here’s why UM and UIM coverage are essential:
1. High Rate of Uninsured Drivers
In some states, the percentage of uninsured drivers is significantly higher than the national average. Even in states with strong enforcement of insurance laws, there are still many people on the road without insurance.
2. Medical Costs Can Be Substantial
Medical bills after a serious car accident can quickly reach tens or even hundreds of thousands of dollars. Without UM or UIM coverage, you could be left to cover these expenses on your own if the at-fault driver can’t.
3. State Minimum Coverage May Be Insufficient
Even if a driver has the state-required minimum insurance, those limits might not be enough to cover the full extent of your damages. In many states, minimum liability limits can be as low as $25,000 for bodily injury per person, which is often insufficient for serious injuries.
4. Protection Against Hit-and-Run Drivers
Hit-and-run accidents can leave you with serious injuries and no recourse to recover your costs if the driver isn’t caught. UM coverage helps fill this gap by offering financial protection when the responsible party can’t be identified.
How Much UM/UIM Coverage Do You Need?
The amount of uninsured and underinsured motorist coverage you need depends on several factors, including your state’s requirements, the value of your vehicle, and your personal financial situation. Most insurance experts recommend carrying coverage limits similar to your liability coverage.
Consider the Following:
- State Requirements: Some states require UM and UIM coverage as part of a standard auto insurance policy, while others make it optional. Be sure to check your state’s minimum requirements.
- Your Assets: If you have significant assets (home, savings, etc.), it’s wise to purchase higher UM/UIM limits to protect yourself financially in case of a severe accident.
- Your Vehicle Value: If your car is expensive to repair or replace, higher limits will ensure you’re not left with a financial burden after an accident.
Stacking UM/UIM Coverage
Some states allow you to “stack” your UM/UIM coverage if you have multiple vehicles insured under the same policy. This means you can combine the coverage limits of each vehicle to increase your total protection. For example, if you have two cars insured with $50,000 in UM coverage each, stacking would give you a total of $100,000 in coverage for an accident.
Example of Stacking:
- Without stacking: If you have one vehicle insured with $50,000 in UM coverage, that’s your maximum coverage.
- With stacking: If you have two vehicles, each with $50,000 in UM coverage, you could stack them for a total of $100,000 in coverage.
Stacking is a useful option in states where it’s allowed, but it may come with slightly higher premiums. Check with your insurer to see if it’s available in your state and whether it’s worth the extra cost.
Conclusion
Uninsured and underinsured motorist coverage are essential components of a well-rounded auto insurance policy, offering protection in situations where the at-fault driver cannot fully compensate you. With medical costs and vehicle repairs often far exceeding state minimum insurance limits, UM and UIM coverage help ensure that you’re not left with a financial burden after an accident.
To protect yourself and your family, it’s a good idea to review your auto insurance policy and consider purchasing UM/UIM coverage that matches your financial needs and risk exposure. Speak with your insurance agent to understand your options and make sure you’re fully covered for the unexpected.
