Uninsured and Underinsured Motorist Coverage: What is It and Why Do You Need It? (USA)
By DRIVE-SAFELY.NET
Most people know how important it is to carry personal auto insurance. If you are in an accident, the insurance you hold can help you pay for much of the expenses associated with that accident.
However, what you may not know is your comprehensive insurance is not meant to cover you in the event of an accident.
Instead, it is used to cover the other vehicle and its passengers if you are the one at fault in an accident.
Similarly, if you are in an accident where the other party is at fault, you will need to go after damages from that party’s insurance.
But what happens if the other party does not have insurance or they do not have enough?
Although most states have laws mandating all drivers to hold insurance, approximately one out of every eight drivers does not carry insurance.
In some states, that rate is as high as one out of every five. If you are unfortunate enough to be involved in an accident with one of these drivers, you could be left covering your costs out of pocket. That is unless you have uninsured and underinsured motorist coverage on your policy.
Uninsured Motorist Coverage
Uninsured motorist coverage (UM) covers the costs of your medical bills and lost wages if you are in an accident in which you are not the at-fault driver and the other driver either a) has no insurance or b) does not carry the state minimum insurance.
Uninsured motorist coverage will step in and fulfill the role the other party’s liability insurance would have. In addition to uninsured motorists, UM insurance will apply if you are the victim of a hit and run accident.
UM coverage will cover the following for you and all passengers in your vehicle:
- Medical Costs
- Lost Wages
- Pain and Suffering
Uninsured motorist coverage (UM) typically does not apply to property damage. However, many policies will allow you to buy additional coverage for property damage. This coverage is typically referred to as UMPD. VIDEO: What Is Uninsured Motorist Coverage?
State Laws for Uninsured Motorist Coverage
| State | Requirements for buying UM or being offered UM | Can you reject UM in writing? | Minimum UM coverage amount | Is UMPD required? If so, minimum coverage amount | UMPD deductible |
| Alabama | Must be offered | Yes | 25/50 | No | N/A |
| Alaska | Must be offered | Yes | 50/100 | You can reject UMPD in writing; $25,000 minimum if you buy it | $250 |
| Arizona | Must be offered | Yes, on a state-approved form | UM 15/30 | No | n/a |
| Arkansas | UM must be offered. UIM must be offered if you buy UM. | Yes | UM – 25/50 | You can reject UMPD in writing; $25,000 minimum if you buy it | $200 |
| California | Must be offered | Yes | 15/30 | You can reject UMPD coverage | If you have collision coverage, UMPD only pays the deductible not covered by collision insurance, up to $3,500. |
| Colorado | Must be offered | Yes | 25/50 | May be offered at your request | N/A |
| Connecticut | Must be offered | Yes | 20/40 | No | N/A |
| Delaware | Must be offered | Yes | 15/30 | Acceptance of UM includes UMPD; $5,000 | $250 (unless otherwise agreed in writing) |
| District of Columbia | UM is required | You can reject only UIM | UM – 25/50 | Yes; $5,000 | $200 |
| Florida | Must be offered | Yes | 10/20 | N/A | N/A |
| Georgia | Must be offered | Yes | 25/50 | Yes; $25,000 | $250 |
| Hawaii | Must be offered | Yes | UM – 20/40 | Yes; $10,000 | N/A |
| Idaho | Must be offered | Yes | UM – 25/50 | N/A | N/A |
| Illinois | Required | No | UM – 25/50 | UMPD must be offered if you do not have collision insurance (you can reject in writing); $15,000 | $250 |
| Indiana | Must be offered | Yes | UM – 25/50 UIM – $50,000 | You can reject UMPD; $10,000 | Choose no deductible or a max of $300; deductible waived if your car was hit while legally parked and unoccupied |
| Iowa | Must be offered | Yes | UM – 20/40 | N/A | N/A |
| Kansas | Required | You can only reject coverage that exceeds 25/50 | 25/50 | N/A | N/A |
| Kentucky | UM must be offered; UIM is available upon request | Yes | 25/50 or a $60,000 single limit for both UM and UMPD | N/A | N/A |
| Louisiana | Must be offered | Yes | 15/30 | UMPD available but not required | $250 |
| Maine | Required | N/A | 50/100 | N/A | N/A |
| Maryland | Required | N/A | 30/60 | UMPD is required; $15,000 | $50 – $250 (options in $50 increments) |
| Massachusetts | Required | N/A | 20/40 | N/A | N/A |
| Michigan | No requirement | N/A | N/A | N/A | N/A |
| Minnesota | Required | N/A | UM – 25/50 | N/A | N/A |
| Mississippi | Must be offered | Yes | 25/50 | UMPD can be rejected; $25,000 minimum if you buy it | $200 |
| Missouri | UM required | N/A | 25/50 | N/A | N/A |
| Montana | Must be offered | Yes | 25/50 | N/A | N/A |
| Nebraska | Required | N/A | UM – 25/50 | N/A | N/A |
| Nevada | Must be offered | Yes | 25/30 | N/A | N/A |
| New Hampshire | Must be offered | You can reject UM in excess/umbrella policies only | 25/50 | Yes; $25,000 | N/A |
| New Jersey | Required on standard policies | N/A | UM – 15/30 | Yes; $5,000 | N/A |
| New Mexico | Must be offered | Yes | 25/50 | Yes; $10,000 | $250 maximum |
| New York | UM required, UIM is optional | N/A | 25/50 for injury, 50/100 for death | N/A | N/A |
| North Carolina | UM required. UIM required if UM coverage exceeds 30/60 | N/A | UM – 30/60 | Yes; $25,000 | $100 |
| North Dakota | Required | N/A | 25/50 | N/A | N/A |
| Ohio | An insurer decides whether to offer it | N/A | 25/50 | Available upon your request, not to exceed $7,500 | $250 |
| Oklahoma | Must be offered | Yes | 25/50 | N/A | N/A |
| Oregon | UM is required. UIM is required if UM coverage is more than 25/50 | N/A | 25/50 | Yes; $20,000 | $200; $300 in hit-and-run claims |
| Pennsylvania | Must be offered | Yes | 15/30 | N/A | N/A |
| Rhode Island | Must be offered | Yes | 25/50 | Not required but $25,000 minimum coverage if you buy it | $200 |
| South Carolina | UM is required | You can reject UIM | 25/50 | Yes; $25,000 | $200 |
| South Dakota | Required | N/A | 25/50 | N/A | N/A |
| Tennessee | Must be offered | Yes | 25/50 or a $60,000 single limit | Yes; 15 | $200 |
| Texas | Must be offered | Yes | 30/60 | Yes; $25,000 | $250 |
| Utah | Must be offered | Yes | 25/65 for UM; 10/20 for UIM | Required if you do not have collision coverage | $250 |
| Vermont | Required | N/A | 50/100 | Yes; $10,000 | $150 |
| Virginia | Required | N/A | 25/50 | Yes; $20,000 | $200 |
| Washington | Must be offered | Yes | 25/50 | Required if you don’t have collision coverage, minimum of $10,000 in coverage | $100; $300 for hit-and-run claims |
| West Virginia | UM is required; UIM is optional | N/A | 20/40 | Yes; $10,000 | $300 |
| Wisconsin | UM is mandatory | UIM can be rejected | 25/50 for UM; 50/100 for UIM | N/A | N/A |
| Wyoming | Must be offered | Yes | 25/50 | N/A | N/A |
Source: American Property Casualty Insurance Association
Underinsured Motorist Coverage
Underinsured motorist coverage is similar to uninsured motorist coverage in that it covers your costs if you are not at fault.
In this case, the other driver does have insurance, however, it is not enough to cover your damages.
For example, if the other party has $25,000 in liability insurance, their carrier will only pay out $25,000, regardless of the extent or costs of your injuries.
If you have $75,000 worth of medical bills and lost wages, you are left paying for the rest yourself.
But, if you have underinsured motorist coverage, your policy will step in to help you cover what the other policy did not.
If you, for example, have a $100,000 underinsured motorist policy, the at-fault party will cover their policy limits of $25,000.
Your policy will then come in and pay the remaining $25,000. It is important to understand that your UIM insurance is meant to supplement the other driver’s insurance, not add on to it.
The maximum payout you can receive is your UIM policy limit, not your UIM plus the other party’s insurance.
Who Should Carry Uninsured and Underinsured Motorist Coverage?
Almost half of the states in the US require drivers to carry some level of UM/UIM insurance.
Regardless of whether your state requires you to maintain UM/UIM insurance, it is best to elect to do so.
You don’t want to end up having a huge medical bill that you cannot afford when someone else was responsible for the accident. And in case you are worried about how much the cost of your premium will go up, don’t be. Adding UM/UIM coverage to your policy can cost you as little as $3-$9 per month.
Finally, while you may think that your health insurance and personal injury protection coverage will be enough to cover your expenses, you must realize that they only cover your current injuries and expenses. They do not account for pain and suffering, future medical bills, or loss of future earnings.
Don’t get stuck without the insurance coverage you need. Adding UM/UIM is affordable, easy to do, and a smart choice to protect yourself.