What is uninsured motorist coverage?

Uninsured motorist (UM) coverage protects you financially if you're in an accident with a driver who doesn't have insurance. Underinsured motorist (UIM) insurance, on the other hand, kicks in when you're in an accident with someone whose insurance doesn't cover the full cost. Without these coverages, you could be stuck paying out of pocket.

Each state has its own requirements for car insurance, and many states require uninsured motorist coverage. We’ve outlined what these coverages do, who needs them and who might want extra insurance below.

How does uninsured motorist coverage work?

If you're in an accident with another driver and they're at fault, you'd typically file a claim with their insurance company and be reimbursed for your related costs. But what happens when the other driver doesn't have insurance?

UM coverage can help in a no-fault state, too.

If you don’t have uninsured motorist coverage, you’re likely stuck paying out of pocket and trying to sue for damages the other driver may not be able to afford. Coverage for uninsured drivers takes that off your plate.

These policies cover bodily injury or property damage and include hit-and-run coverage in some places. If you're in an accident with an at-fault driver and they don't have insurance, you submit a claim against your UM policy and your insurer will reimburse you up to your uninsured/underinsured motorist coverage limits.

Many states actually require uninsured motorist coverage, with minimum coverage limits usually ranging from $25,000 per person/$50,000 per accident up to $50,000 per person/$100,000 per accident.

What is underinsured motorist insurance?

Underinsured motorist insurance covers accidents where the other driver is at fault but doesn't have enough insurance to cover all of your damages. For example, if your costs are $150,000 but their policy only covers $100,000, the remaining $50,000 would normally come out of your pocket.

If you have underinsured motorist insurance, when an accident like this happens, you first file a claim with the at-fault driver's liability insurance. When it pays out its maximum, you'll file a claim with your underinsured motorist insurance provider.

The amount you receive from the other driver's insurance should count towards your payout. For example, if you receive $50,000 from the other driver's insurance and have a coverage limit of $100,000, your insurer may only pay $50,000.

What is the difference between uninsured and underinsured motorist coverage?

Put simply, the difference is that:

• Uninsured motorist coverage applies when you're in an accident caused by someone who doesn't have auto insurance at all.
• Underinsured motorist coverage applies when the at-fault driver has liability coverage, but the total damages are higher than their policy's limits.

Both types of policies have coverage limits that are split between bodily injury coverage and property damage coverage.

Bodily injury coverage

Here’s how the two types of policies compare when it comes to bodily injury coverage:

• Uninsured motorist policies that cover bodily injury will cover the full costs of medical bills associated with the accident, up to your coverage limits. Lost wages, funerals and legal costs are typically covered as well. There are two coverage limits associated with a policy: the per-person maximum and the per-accident maximum. Per-person limits typically range from $25,000 to $50,000, and per-accident limits typically range from $50,000 to $100,000.
• Underinsured motorist policies that cover bodily injury require an extra step of claims filing before you reach your full payout. First, submit a claim to the at-fault driver's insurance company that includes all your injuries, lost wages, funeral costs or other relevant expenses. Once their policy reaches its maximum, you'll submit any additional medical costs to your insurance provider. The limit of your policy will be the maximum payout you receive, including contributions from both your insurer and the other driver's insurer.

Property Damage

Here’s how the two types of policies compare when it comes to property damage coverage:

• Uninsured motorist policies that cover property damage pay for repairs to your vehicle and any damage to your home or other property. The other driver must be found at fault and have no insurance coverage for this policy to kick in, though.
• Underinsured motorist policies that cover property damage also pay for repairs to your vehicle, home and other property. After you submit a claim that maxes out the other driver's policy, you file a claim for any remaining costs with your insurance provider. As with bodily injury policies, you only receive the difference between your maximum and the other driver's payout, rather than the full maximum from each policy.

How much uninsured motorist coverage do I need?

So, you may be asking yourself — how much uninsured motorist coverage do I need? Minimum uninsured motorist coverage limits vary from state to state, but your coverage will need to at least meet the minimum for your area. Check the chart below to see whether your state requires UM coverage.

However, you may want even more coverage if you're worried about high medical costs or you drive an expensive car. It’s relatively easy to calculate how much coverage you need to replace your vehicle, but it’s harder to account for all your possible medical costs after an accident. Like with most types of insurance, the right amount of coverage is probably however much you can reasonably afford.

Uninsured motorist requirements by state

Each state has different requirements for uninsured or underinsured motorist coverage. Some states have no requirement at all.

Coverage amounts are usually denoted as two separate numbers. The first number refers to the per-person minimum, while the second number is the per-accident minimum. For example, a 25/50 coverage requirement means you need $25,000 in coverage per person and $50,000 per accident.

*These states only require uninsured or underinsured motorist coverage if you choose to have car insurance.

Do I need uninsured motorist coverage if I have collision and comprehensive?

Short answer? Probably.

Comprehensive coverage and collision coverage are other types of auto insurance that protect you in ways basic liability coverage doesn’t:

• Comprehensive insurance policies cover damage from things like natural disasters, theft and vandalism. This type of coverage does not cover damage caused by vehicle collisions, including accidents with an uninsured or underinsured driver, so there’s no functional overlap between comprehensive coverage and UM coverage.
• Collision insurance may cover the cost of damage to your vehicle in an accident with an uninsured or underinsured motorist, but it won't cover your medical bills or any damage to other property. So, there’s overlap with UM coverage, but one policy doesn’t make the other totally obsolete.

What is "stacked" uninsured motorist coverage?

In some states, you can combine uninsured or underinsured motorist coverage limits for multiple vehicles in the household. This means that if you have two vehicles with $50,000 in coverage for uninsured motorists, you can “stack” both limits and potentially receive a payout of $100,000 in the event of an accident. Stacking can occur within the same policy that covers multiple cars or across multiple policies with the same policyholder.

Stacking increases your potential coverage, but it may cost you more in premiums. It also isn’t available everywhere, so check if this option is allowed in your state.

Bottom line: Is uninsured motorist coverage worth it?

Uninsured motorist coverage provides a safety net in case you're in an accident with a driver who doesn't have insurance, and underinsured motorist coverage offers the same protection against drivers who don’t have enough insurance.

Many states require uninsured or underinsured motorist coverage, so check requirements in your area. Even if these policies aren't a requirement for you, having this type of policy offers significant protection from the unexpected. If you’re concerned about high medical costs or driving an expensive vehicle, it's even more likely to be worth it.