What Is Uninsured and Underinsured Motorist Coverage?

uninsured motorist coverage

Uninsured motorist coverage is a type of insurance that provides financial assurances to drivers in situations where they may be involved in a vehicle accident where the other party has a lack of coverage. 

According to a study conducted in part by the Hanover Insurance Group, more than 20% of drivers are considered uninsured or lack the minimally required coverage for their state. The majority of these drivers are also found in states with high motorist populations such as Oklahoma, Michigan, and Tennessee.

It’s been estimated that the average uninsured motorist or underinsured motorist claim can cost upwards of $20,000 when dealing with the following types of driver scenarios:

  • Medical care for any passengers in the event the other driver lacks liability insurance
  • Coverage in situations where the insurer fails to provide necessary coverage
  • Property or vehicle damage under a hit and run scenario
  • Collisions with a driver who is without any liability coverage

Currently, there are 49 states that require insurance coverage to operate a vehicle on the roads. The main types of coverage offered or required depending upon where you are located are:

Types of Uninsured Motorist Coverage

Depending upon the tier level of your car insurance policy or the benefits that each company offers, there are different kinds of coverage that you are able to include upon registering your vehicle for coverage. 

  • Uninsured Motorist Property Damage (UMPD) – Having this type of insurance will cover the cost of repairs associated with a hit and run accident. Most policies consider the coverage applicable if it damages a vehicle, a person, or a form of property such as a fence or building.
  • Uninsured Motorist Bodily Injury (UMBI) – Unlike basic bodily injury or personal injury protection, UMBI is specifically used to pay for any sustained injuries as a direct result from hit and run accident. Gathering as much information as possible will increase the likelihood that you can receive coverage as well as claim that is processed successfully.

What is Underinsured Motorist Insurance?

Another highly beneficial alternative to uninsured motorist is underinsured motorist coverage. Typically, your insurer will add this type of coverage to your policy for a few extra dollars per month over the course of your policy. 

Underinsured motorist coverage works by protecting you in the event of an accident where the other driver’s policy is inadequate when it comes to the financial coverage necessary to pay for medical bills related to the incident. Granted the other driver is found to be at fault, your policy will begin to pay out damages only once their coverage limit has been reached. 

The total amount of coverage approved will vary according to the insurance limits that you selected upon enacting your policy.

What Does Underinsured Motorist Coverage Include?

There are several things that underinsured motorist will pay for upon a motor vehicle accident that are above and beyond what your basic liability insurance would provide. Many of these are the same benefits as uninsured motorist coverage, however the coverage goes a bit further in certain situations.

  • Underinsured motorist bodily injury (UIM or UIMBI) – Covers hospital and other bills in excess of the amount of the other person’s automobile insurance policy. A claim made on a policy that resulted in $80,000 in damages could be pursued against a driver’s insurer that provided a maximum of $50,000, however, the remainder of the damages would need to be covered by your insurance provider. 
  • Underinsured motorist property damage (UIMPD) – Vehicular damages suffered due to an at fault driver’s actions will provide you up to policy limit amount for each individual insurance carrier. The maximum allowable amounts that can be requested cannot exceed the total costs pertaining to the incident. 

Having this type of coverage isn’t always a guaranteed payout if you exceed the policy stipulations. Some policy insurers require that you file a claim within a specified time frame such as no later than 30 days after the accident occurs. These may vary from carrier to carrier and will be spelled out by the auto insurance representative.

The Difference Between Uninsured and Underinsured

Uninsured motorist coverage offers a certain level of coverage to drivers who have an encounter with someone whose automobile coverage is non-existent due to policy cancellation or lack of obtaining coverage initially. The reason underinsured motorist insurance would come into play is when a policyholder has the states minimal mandatory limits, however does not have enough coverage to cover certain types of claim such as medical damages. 

State Laws for Uninsured Motorist Coverage

Although insurance is required in most states, the levels of coverage as well as the minimum and maximum limits depend on several different factors. Some only require that uninsured motorist coverage be offered, while others have laws that make it mandatory to carry the coverage. 

Uninsured Motorist Coverage RequiredCoverage Minimums for Required States
District of Columbia25/50
Illinois25/50
Kansas25/50
Massachusetts20/40
Maine50/100
Maryland30/60
Minnesota25/50
Nebraska25/50
New Jersey15/30
North Dakota25/50
New YorkNo minimum
Oregon25/50
South Dakota25/50
Virginia25/50
Vermont50/100
West Virginia25/50
Wisconsin25/50

Although, not all states require a driver to obtain uninsured motorist coverage, those that do stipulate minimum coverage amounts with the exceptions of New York. In addition, Michigan does not have a law that compels insurers to offer or require this type of insurance for policyholders.

Collision Insurance Vs. Uninsured Motorist 

Collision insurance, also known as comprehension and collision insurance in many places, is meant to provide financial compensation for repairs needed during a collision without regard to which driver is at fault in the situation.

Uninsured motorist property damage (UMPD) does not apply to most driver situations and is only payable during an event in which the fault is owned by the driver who has a lack of coverage or none at all.

Collision Insurance
Uninsured Motorist
Coverage regardless of faultAllows stackable coverage
Applies in hit and run casesOnly covers your vehicle
Required in 49 statesNot required in all states
Covers property damagesProtects your belongings

FAQs

Do I Need Uninsured Motorist if I Have Full Coverage?

It is not required to have uninsured motorist coverage on a policy that includes full coverage. Often this type of insurance will include additional coverages and riders that provide benefits in the case of property damage, underinsured motorist, medical coverage and personal injury. However, there are some finance companies that will require you to carry both. 

How Much Uninsured Motorist Coverage Do I Need?

The amount of uninsured motorist coverage that you should elect to purchase is dependent on your state of residence, their required minimums by law, as well as the age and value of your vehicle.

Should I Get Uninsured Motorist Coverage?

Uninsured motorist is an optional add-on in many states. However, it may be worth considering regardless of the requirement due to the fact that one may not provide coverage where the other one will in some vehicle accidents. 

Conclusion: 

Car insurance is something that millions of drivers factor in when considering the purchase of a vehicle. With a myriad of options based on maximum coverage amounts, individual state requirements, property values, and unexpected medical expenses, the combinations can be exhausting. However, having the right level of coverage can mean the difference between paying minimal costs and having to spend tens of thousands for damages and repairs. 

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