What Is Uninsured/Underinsured Motorist Coverage?
Uninsured/Underinsured Motorist Coverage protects you if you're involved in an accident where the at-fault driver either doesn’t have any insurance (uninsured) or doesn’t have enough insurance to cover your damages (underinsured). Here’s how it works:
Uninsured Motorist Coverage: This comes into play if you’re hit by someone who doesn’t have insurance at all. You can file a claim with your own insurance company to cover the costs of damage to your car, medical bills, and other expenses.
Underinsured Motorist Coverage: This applies when the at-fault driver has insurance, but not enough to cover all of your costs. If their insurance doesn’t meet the full cost of repairs or medical bills, your underinsured motorist coverage will kick in to cover the difference, up to your policy limits.
In essence, UM/UIM coverage ensures that you won’t be left high and dry if the person who causes your accident can’t pay for the damage or injuries they caused.
Why Is Uninsured/Underinsured Motorist Coverage Important?
It might seem like something you don’t need, especially if you live in a state where it’s not mandatory, but here’s why it’s a smart idea to include it in your policy:
A Growing Number of Uninsured Drivers According to the Insurance Research Council, nearly 1 in 8 drivers in the United States are uninsured. In some states, that number can be even higher. If you’re in an accident with an uninsured driver, having UM/UIM coverage means your insurance will cover the costs, so you won’t have to pay out of pocket.
Underinsured Drivers Are Common Many drivers don’t carry enough insurance to fully protect others in the event of an accident. If you’re hit by someone with the minimum required coverage, but your damages far exceed that amount, your underinsured motorist coverage will fill in the gap.
Protection in Hit-and-Run Accidents Unfortunately, hit-and-run accidents are all too common. If you’re involved in a hit-and-run, and the responsible party is never caught, UM/UIM coverage will cover your medical bills and damages as if the at-fault driver had insurance.
Peace of Mind Auto accidents can be stressful and expensive, especially when you have to deal with the aftermath of a driver who either can’t or won’t pay for the damage. UM/UIM coverage provides peace of mind, knowing that if you're in a collision with an uninsured or underinsured driver, your insurance will protect you financially.
How Much Does Uninsured/Underinsured Motorist Coverage Cost?
While the exact cost of UM/UIM coverage can vary depending on factors like your location, driving history, and insurance provider, it’s generally affordable. Many drivers find that adding this coverage to their policy increases their premium by just a small amount—often only a few dollars per month. Considering the financial protection it offers, it’s a small price to pay for peace of mind.
When Is Uninsured/Underinsured Motorist Coverage Not Worth It?
While UM/UIM coverage is beneficial for many drivers, it may not be necessary in all situations. Here are a few scenarios where it might not be worth the cost:
Your State Doesn’t Have a High Number of Uninsured Drivers If you live in a state where the uninsured driver rate is low, and most drivers carry sufficient insurance, you may decide to skip this coverage. However, you’d want to carefully consider the accident rates in your area and the likelihood that you’d be involved in an accident with an uninsured or underinsured driver.
You Have an Excellent Health Insurance Plan If you have strong health insurance coverage, you may feel confident that you could manage medical bills following an accident, even if the at-fault driver doesn’t have insurance. However, remember that health insurance doesn’t cover car repairs, lost wages, or other accident-related costs.
Your Vehicle Is Worth Less Than Your Deductible If you drive an older car with a low market value, it might not make sense to pay for the additional coverage, especially if you’re unlikely to recover the full cost of repairs after an accident.
How to Decide If You Need Uninsured/Underinsured Motorist Coverage
Ultimately, the decision to include UM/UIM coverage in your policy comes down to assessing your own risk and your financial situation. Here are a few factors to consider:
Where You Live: Check the percentage of uninsured drivers in your state. States like Florida and Texas have higher uninsured driver rates, while states like Massachusetts and New York tend to have lower rates.
Your Financial Situation: If you can’t afford to pay out of pocket for car repairs, medical bills, or other accident-related expenses, this coverage is a good option to help protect your finances.
Your Driving Habits: If you drive frequently, particularly in urban areas or places with heavy traffic, you might be at a higher risk for an accident with an uninsured or underinsured driver.
Final Thoughts
While it’s not always required, Uninsured/Underinsured Motorist Coverage can provide essential protection in a world where too many drivers are either underinsured or not insured at all. For a relatively low cost, you can ensure that you’re not left holding the bag if the other driver doesn’t have the means to cover your costs. If you value financial security and peace of mind, adding UM/UIM coverage to your auto insurance policy is definitely worth considering.
Before making any decisions, speak with your insurance agent to assess your needs and find the right coverage for you. The small additional cost could ultimately save you thousands of dollars if you find yourself in an accident with an uninsured or underinsured driver.
