UPDATED: Mar 13, 2020
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Have you ever have been hit by a driver who didn’t have car insurance? Have you ever been involved in a hit-and-run accident, whether in your own vehicle or as a pedestrian? If not, then consider yourself lucky.
However, if you don’t have any uninsured motorist/underinsured motorist coverage on your policy, you may not be so lucky in the future.
This is one of the few types of coverage which can financially protect you in the event that:
- You are hit by a hit-and-run driver
- You get into a collision with the driver who doesn’t have insurance, or
- If you get into an accident with another motorist whose coverage limits are insufficient to give you the financial compensation you are owed
In some states, UM/UIM coverage is mandatory. In others, it is simply optional. No matter what, though, you have total control over the coverage limits you purchase (and, consequently, how much more this coverage will make your premiums cost).
We will help walk you through the ins-and-outs of uninsured motorist coverage, the benefits of purchasing it (if optional) and/or increasing your coverage limits, as well as the challenges of filing a claim against your UM/UIM coverage in the event of a worst-case scenario.
What UM/UIM Coverage Does
Uninsured/underinsured motorist coverage picks up the slack where the other driver’s liability coverage would otherwise pay out, assuming that person is completely – or at least mostly – at fault.
If all or most of the fault lies with you, it’s your liability coverage which will pay out claims filed by the other driver’s insurance company.
Compensation for property/vehicle damage and medical expenses which you sustain from an accident that’s your fault will come from your comprehensive/collision and medical payments/personal injury protection coverages, respectively.
Because these coverages are designed to pay out on claims which the other driver’s liability coverage would normally pay out, it should come as no surprise that’s uninsured motorist coverage and liability coverage work in very similar ways.
There are three different types of coverage limits that come with uninsured motorist coverage:
- Bodily injury liability per person
- Bodily injury liability per accident
- Property damage liability
On your policy, you may see it written out as $20,000/$40,000/$20,000, or however much your coverage limits are. If you want more information on how these limits apply to your accident, we go in-depth in our sister article about liability coverage.
In general, the bodily injury portion covers medical expenses, lost wages, and any other replacement service costs (such as having to hire a cleaning or babysitting service which you normally wouldn’t have to if you were healthy) which you and any other passengers in your vehicle incur as a result of the accident.
The property damage liability pays for any damages to your vehicle and any other property that was damaged as a result of the accident. Enter your zip code below to view companies that have cheap auto insurance rates. Secured with SHA-256 Encryption
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UM/UIM Costs and Requirements
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There are exactly 20 US states where uninsured motorist coverage is required: Illinois, Wisconsin, Kansas, West Virginia, Maine, Virginia, Maryland, Vermont, Massachusetts, South Dakota, South Carolina, North Dakota, North Carolina, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, and Oregon.
In the chart above, you can see examples of average monthly premiums for a basic auto insurance policy.
If you live in any of these states but you haven’t looked at your insurance policy closely, you can at least rest assured that your policy will protect you financially if you get into an accident where claims can be filed against your uninsured motorist coverage.
Unfortunately for some drivers, none of the states where insured motorists are at the greatest Danger from uninsured or underinsured drivers have mandatory UM/UIM laws.
You will most likely be able to purchase this optional form of coverage if you live in any of the remaining 30 States, but it will raise your overall monthly premium costs.
However, if you live in any of the 10 states below, you may want to give some serious thought towards adding this coverage to your policy:
- Oklahoma – 26%
- Florida – 24%
- Mississippi – 23%
- New Mexico – 22%
- Michigan – 21%
- Tennessee – 20%
- Alabama – 20%
- Rhode Island – 17%
- Colorado – 16%
- Washington – 16%
The percentages listed next to each state reflect the number of drivers that are estimated to be on the road, at any given time, driving without insurance.
This means that using Oklahoma as an example, you have at least a 26 percent (or 1 in 4) chance of getting into an accident with a driver who does not have insurance every time you get behind the wheel.
Of course, you are risk goes up when you take into account the number of drivers who may have insurance, but not enough to cover the expenses of an accident, or drivers who may flee the scene of an accident regardless of how much insurance coverage they are carrying.
With such alarmingly high odds, it’s a pretty smart idea to add uninsured motorist coverage to your policy. However, as you can see in the chart below, it may add a considerable cost to your monthly premiums.
Of course, there are other factors that can play a role in whether or not you decide to purchase uninsured motorist coverage.
If you live in a no-fault state where PIP coverage is mandatory, or if you have chosen to put this coverage on your policy even though it isn’t mandated by state laws where you live, uninsured motorist coverage may be a little excessive.
Personal injury protection coverage is usually cheaper, and you don’t really need UM/UM property damage coverage since your comprehensive and collision coverages will cover any property damage, regardless of fault.
There are specific circumstances, even when it isn’t mandatory, where UM/UIM coverage may be the cheaper option.
For instance, in states where underinsured motorist coverage and personal injury protection coverage are not mandatory, and you cannot afford comprehensive or collision coverage, UM/UIM maybe the cheaper option.
It will basically pay out any claims which you would otherwise file against these specific types of coverage, assuming you are not mostly or completely at fault in the accident.
A word of caution before you resort to this money-saving option, though: filing a claim against your UM/UIM coverage can be considerably more difficult than filing most other claims.
Furthermore, the money you save on your monthly premiums may not be enough to pick up the slack if your insurance provider doesn’t want to pay the amount of money you need for medical expenses and/or property damage on your uninsured motorist claim.
Filing a UM/UIM Claim
Filing a claim against your uninsured motorist coverage is classified as a first-party claim. This means you are filing a claim against an entity that has a strong financial interest in either rejecting your claim or paying out as little as possible on an accepted one.
This is significantly different – and more difficult – than getting financially compensated by an at-fault driver’s liability coverage. Such claims are considered third-party claims, which are filed on your behalf by your insurance provider.
Insurance companies have stronger financial and legal resources, so it’s easier for them to fight for the money you deserve on your behalf.
With first-party claims, on the other hand, your insurance company will use its resources against you to try and deny your claim or pay out less than what you need. You should steel yourself in advance and prepare for an uphill battle.
Another aspect that may work either against you or in your favor is how fault is determined in the accident. If the other driver is 100 percent at fault, whether they are uninsured, underinsured, or a hit-and-run, you will have more leverage when filing your claim.
However, if legal fault is divided between you and the other driver, or if there are circumstances of your hit-and-run which your insurance company deems you partially liable for, it will be even harder to get the funds you deserve.
One very unique aspect of uninsured motorist coverage claims is the fact that they are stackable. This means that, when you file your claim, you can collect funds from different coverages and, potentially, multiple policies.
If you have a single auto insurance policy with multiple vehicles insured under it, the claim money you collect can equal a total of coverage limits for all of the vehicles put together.
Likewise, if you are paying for multiple policies on each vehicle, you can collect claim funds from each policy – up to the purchased limits, of course.
Finally, some states have unique laws that allow your claim money to come from even more resources. It’s best to talk to your insurance agent for more information on what your options are, and where you can collect your claims from.