Uninsured Auto Insurance: What You Need To Know

Uninsured motorist coverage is an additional feature that can be added to your car insurance policy to protect you in the event of an accident with an uninsured driver. This type of insurance is mandatory in some states and highly recommended for all drivers, as it can help cover your expenses if you are injured or your vehicle is damaged. Without it, you could be left paying for medical bills or vehicle repairs out of your own pocket. Uninsured motorist coverage is divided into two types: Uninsured Motorist Bodily Injury Coverage (UMBI) and Uninsured Motorist Property Damage Coverage (UMPD). UMBI covers medical expenses for both you and your passengers, while UMPD covers repairs to your car.

Uninsured Motorist Bodily Injury Coverage (UMBI)

UMBI can pay for lost wages if you're unable to work due to injuries from a car accident, as well as pain and suffering compensation. It's important to note that UMBI does not pay anything to the driver who was uninsured or underinsured; it pays you. In some states, you can also purchase Uninsured Motorist Property Damage (UMPD) coverage, which pays for damages to your car if an uninsured driver hits you.

The amount of UMBI coverage you need depends on your state's requirements and your personal situation. If your state requires UMBI, you must buy at least the state's minimum, which is typically an amount that matches your liability coverage. For example, if your liability limits are $100,000 for injury to one person and $300,000 for injuries in one accident (100/300), you would buy $100,000 per person and $300,000 per accident in UMBI coverage. You can also consider the amount of bodily injury liability insurance you have and get an equal amount of UMBI to ensure you have the same level of coverage for yourself and your passengers.

UMBI is a crucial coverage to have, especially if you have a high-deductible health insurance plan or if you frequently have passengers in your vehicle who may not have their own health insurance. While health insurance may cover injuries sustained in a car accident, UMBI provides additional benefits, such as compensation for lost wages and pain and suffering, which health insurance typically doesn't cover.

In summary, UMBI is a vital component of car insurance that can provide financial protection and peace of mind in the event of an accident with an uninsured or underinsured driver. By understanding the risks and your state's requirements, you can ensure you have the appropriate level of UMBI coverage to safeguard yourself and your passengers.

Uninsured Motorist Property Damage Coverage (UMPD)

UMPD covers repair costs to fix your car, as well as any extra costs if the other driver doesn’t have enough property damage liability insurance. It can also cover damage to your home or other property. This type of insurance is particularly useful if you don’t have collision insurance for your car, as it can help pay for repairs if the costs exceed the other driver’s property damage liability limits.

UMPD is usually combined with uninsured motorist bodily injury coverage (UMBI), which covers injuries to yourself and passengers in a crash with an at-fault driver who has no car insurance. UMBI may pay medical bills for both you and your passengers.

UMPD is required in some states, offered as an option in others, and unavailable in about half of all states. There may be a minimum requirement for your uninsured motorist bodily injury and personal injury liability limit, and your state may have a limit for how much your uninsured motorist deductible is for different kinds of accidents.

Even if your state doesn’t require you to carry this coverage, it may still be a good idea to have it. If an uninsured or underinsured motorist hits you, they likely won’t be able to pay the costs to repair your car. The same is true for medical expenses for any injured passengers.

Underinsured Motorist Bodily Injury (UIMBI)

UIMBI covers medical bills for both you and your passengers if you're in an accident with a driver who doesn't have enough liability insurance to cover your medical expenses. This type of coverage is especially important if you have a high-deductible health plan or high coinsurance amounts, as it will cover your out-of-pocket medical expenses even if the at-fault driver can't afford to pay. UIMBI may also pay out for pain and suffering, as well as lost wages. According to the National Association of Insurance Commissioners, the average claim payment for UIMBI for injuries is $29,825.

In some states, UIMBI is mandatory, while in others it's optional. However, even if UIMBI isn't required in your state, you take a serious risk if you drive without it. According to the Insurance Information Institute, nearly 13% of drivers countrywide don't have auto insurance, and in some states, this number is over 20%.

When purchasing UIMBI coverage, you usually have the option of choosing the insurance limits of your coverage. For the bodily injury portion that covers your injuries, consider matching the amount of your liability coverage. Some states give you no option but to choose identical limits. For example, if your limits of liability are $50,000 per person and $100,000 per accident, you should consider choosing the same limits for UIMBI. That way, if you're hit by an underinsured driver, each injured passenger (including the driver) can collect up to $50,000. If two passengers collect the full $50,000, you've reached your $100,000 maximum per accident.

UIMBI is an important coverage to have as it provides added protection and peace of mind while driving. It ensures that you and your passengers are taken care of financially in the event of an accident with an underinsured driver.

Underinsured Motorist Property Damage (UIMPD)

UIMPD covers damage to your property, most commonly your vehicle, but also other things such as fences, if you are hit by an underinsured driver. It is important to note that UIMPD is different from collision coverage, which pays to repair your vehicle if you are involved in an accident, regardless of who is at fault. In contrast, UIMPD specifically applies when the other driver is at fault but does not have sufficient insurance to cover the cost of repairs to your vehicle.

The amount of coverage provided by UIMPD varies by state. In some states, UIMPD is required, while in others, it must be offered to all car insurance customers, but you have the option to decline it. The coverage limits also differ, with some states requiring a minimum amount of UIMPD, while in most states, it is optional, and you can usually increase your coverage above the minimum. The coverage limit is the maximum amount the policy will pay out for property damage in a single accident. For example, if you choose a limit of $10,000, that is the most your policy will pay to repair your vehicle if an underinsured driver hits you.

In addition to varying coverage limits, UIMPD may also have a deductible, which is the amount you must pay out of pocket before the insurance company covers the remaining costs. Some states require a deductible for UIMPD, while others do not. When deductibles are required, they are generally low.

When deciding whether to purchase UIMPD, it is essential to consider the risks of driving without it. According to the Insurance Research Council, about one in eight motorists is uninsured, and in some states, the percentage of uninsured drivers is even higher. If you are hit by an underinsured driver and do not have UIMPD or collision coverage, you may have to pursue legal action against the at-fault driver to recover your damages, which can be a challenging and lengthy process.

When is uninsured motorist coverage mandatory?

Uninsured motorist coverage is mandatory in about 20 jurisdictions. In some states, such as Illinois, both uninsured and underinsured motorist coverage are required. In other states, like New Hampshire, car insurance is one of several ways to demonstrate financial responsibility, but if it's purchased, the state requires both uninsured and underinsured motorist coverage to be included on every policy. Other states, like Massachusetts and South Carolina, only mandate uninsured motorist coverage.

While not all states require uninsured motorist coverage, it is highly recommended for all drivers. According to the Insurance Information Institute, almost 13% of drivers across the country do not have auto insurance, and in some states, the number of uninsured drivers exceeds 20%. Without uninsured motorist coverage, you could be left paying out of pocket for medical bills or vehicle repairs if you're in an accident with an uninsured or underinsured driver.

In states that don't mandate uninsured motorist coverage, it is often still offered as an option for drivers to purchase. Even if your state doesn't require it, you take a serious risk if you drive without it.

Frequently asked questions