Uninsured and Underinsured Motorist Coverage
Car Insurance

Difference Between Uninsured and Underinsured Motorist Coverage

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Uninsured Underinsured Motorist Coverage

Getting into a car accident never makes for a good day. But it can become significantly worse if a motorist hits you and they have insufficient auto insurance coverage, which means either no insurance (uninsured) or little insurance (underinsured). So, to fix this problem, many states now require or recommend you add either uninsured or underinsured motorist coverage to your car insurance policy.

What’s the difference between uninsured underinsured motorist coverage, and which one should you consider?

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Table of Contents

Why You Need Uninsured or Underinsured Motorist Coverage

According to The Insurance Research Council, 1 in 8 drivers has insufficient car insurance. Due to the high ratio of motorists driving without proper insurance, insurance providers are offering these add ons to policies: uninsured and underinsured motorist coverage. The primary reason these add ons exist is to prevent you from having to pay out-of-pocket for medical expenses or property damages because an uninsured or underinsured driver hits you.

What Is Uninsured Motorist Coverage?

Suppose you get into a car accident and the person at fault is uninsured. In that case, they have no auto insurance. Depending on your state, having uninsured coverage may be mandatory, while others may be optional. Either way, whether your state mandates uninsured motorist (UM) coverage or not, it may be wise to have it on your auto insurance policy. 

There are two types of uninsured motorist coverage options:

  • Uninsured Motorist Bodily Injury Coverage (UMBI): If someone driving without insurance gets into an accident, injuring you or your passengers, then UMBI will help pay for pain and suffering, income loss due to the accident, any medical expenses related to the accident, and funeral expenses.
  • Uninsured Motorist Property Damage Coverage (UMPD): If you’re involved in an accident with an uninsured driver — where you are not at fault — UMPD will pay to have your car damages repaired. Without UMPD, you’re responsible for paying your car damages upfront. To get compensation from the at-fault driver, you’ll need to take them to court.

What Is Underinsured Motorist Coverage?

If an underinsured driver hits you, their policy may not fully cover the damages done to your car or to the persons within your vehicle. An underinsured motorist is someone with insufficient auto insurance, such as:

  • They have no liability coverage
  • Their insurance denies them or has gone out of business
  • Their coverage does not cover damages incurred (property or medical)

Underinsured Motorist Coverage has two components:

  • Underinsured Motorist Bodily Injury (UIMBI): When an underinsured driver causes an accident that causes you or your passenger harm, UIMBI coverage will kick in to pay for associated medical bills. It also covers income loss, pain, and suffering, and funeral costs.
  • Underinsured Motorist Property Damage (UIMPD): If the at-fault driver causes an accident that damages your car or other property, UIMPD will pay these damages. However, you may have to pay a deductible first.

Uninsured motorist (UIM) coverage isn’t mandatory in all states, so you may want to check your state’s requirements.

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Uninsured and Underinsured Coverage Limits

All insurance products have a max payout; uninsured and underinsured motorist coverage is no exception. Both insurance types are split-limit products in terms of coverage limits. This means that your max payout limits are per person and per accident.

A typical limit is $100,000 per person and $300,000 per accident, also expressed as 100/300 — as you would see in liability limits. Therefore, your best bet when deciding which limit to go with for UM is to select a split limit that reflects your bodily injury dollar value limits. For instance, if you have a limit of $400,000, then you want the same for your uninsured coverage limits.

The Cost Of Uninsured and Underinsured Insurance

The cost of your UM or UIM depends on which insurance product you add to your policy and what limits you choose (higher comes with a higher price tag), and other factors such as driving history. This means that there is no set rate. However, by adding uninsured and underinsured motorist coverage to your policy, you’re looking at roughly a 5% premium increase — which isn’t much considering the protection it provides!

Which States Require Uninsured and Underinsured Insurance?

Insurance by state varies; some will require you to have uninsured or underinsured motorist or both. Other states consider these policy options as add ons. Here’s a quick breakdown of which states require each insurance product:

  • States Requiring Uninsured Motorist Insurance: Connecticut, District of Columbia, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Vermont, Virginia, West Virginia, and Wisconsin.
  • States Requiring Underinsured Motorist Insurance: Connecticut, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, North Carolina, North Dakota, Oregon, South Dakota, Vermont, Virginia, and Wisconsin.

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What About Hit-and-Runs?

It’s important to note that most states allow you to use uninsured or underinsured motorist coverage if someone has hit your car or their car hits you while you’re walking. If your state permits using either of these insurance products, be aware there could be a deductible.

The states that don’t allow UMPD if you’re involved in a hit-and-run: California, Colorado, Georgia, Illinois, Louisiana, and Ohio. Although you can’t use this coverage to pay your expenses, you can utilize collision coverage instead.

Is Insurance Stacking Possible?

You can stack uninsured underinsured motorist coverage in a small handful of states if you have multiple vehicles under one roof. So if you have two cars, you can double your limits, from 100/300 to 200/600.

Is Buying Uninsured or Underinsured Motorist Coverage Worth It?

For only a slight increase to your insurance premiums, these coverages are money well spent. Consider how much worse a car accident would be if the person that hit you wasn’t insured. To save you the headache of having to pay out-of-pocket for your own medical care or to repair the damage done to your property, UM and UIM are definitely worth considering for a small increase in your annual premiums.

Granted, if you live in a state where few people operate a vehicle without adequate insurance like New Jersey, it comes down to a personal choice — if it’s not a state requirement, of course. 

FAQ
The first thing you want to investigate is whether your state requires you to have either of these coverages — if so, then you have your answer. If not, you can compare the current ratio of uninsured drivers in your state to your finances and comfort level. For instance, if you couldn’t afford to pay bills associated with a car accident with a UM or UIM driver, you should have both options. As well, if you’ll drive more confidently knowing you, your passengers and your vehicle are protected, then you should also elect to have both coverage options.
If your state does not require it, then no. However, consider that UM also pays for pain and suffering and lost wages, so there are benefits to having this coverage, outside of just paying medical bills.