Despite laws requiring auto insurance in nearly every state, millions of American drivers hit the road without coverage. According to the Insurance Research Council, about one in eight drivers is uninsured. If one of them causes an accident with you, uninsured motorist coverage could be the only thing standing between you and a massive financial burden.
Uninsured motorist (UM) coverage is one of the most important and most overlooked types of auto insurance. Here’s why you should seriously consider adding it to your policy.
What Is Uninsured Motorist Coverage?
Uninsured motorist coverage pays for your injuries and damages when the at-fault driver has no insurance. There are two types: uninsured motorist bodily injury (UMBI), which covers your medical expenses, lost wages, and pain and suffering, and uninsured motorist property damage (UMPD), which pays for repairs to your vehicle.
Some states require one or both types of UM coverage, while others make it optional. Even where it’s optional, insurance experts strongly recommend carrying it.
What About Underinsured Motorist Coverage?
Underinsured motorist (UIM) coverage is closely related to uninsured motorist coverage. It kicks in when the at-fault driver has insurance, but their coverage limits are too low to pay for all your damages. In many states, UM and UIM coverage are combined into a single coverage type called UM/UIM.
For example, if you suffer $100,000 in injuries and the at-fault driver only has $25,000 in liability coverage, your UIM coverage would help pay the remaining $75,000, up to your policy limits.
Real-World Scenarios
Consider this situation: you’re stopped at a red light when an uninsured driver rear-ends you at 40 mph. You suffer a herniated disc requiring surgery, totaling $80,000 in medical bills plus three months of lost wages. Without UM coverage, you’d have to sue the uninsured driver personally — and if they couldn’t afford insurance, they probably can’t afford to pay an $80,000 judgment either.
With UM coverage, your own insurance company steps in and pays for your medical bills, lost wages, and pain and suffering up to your policy limits, regardless of the other driver’s financial situation.
Hit-and-Run Protection
One important benefit many people don’t realize is that uninsured motorist coverage also applies to hit-and-run accidents. If a driver causes an accident and flees the scene, they’re treated as uninsured since they can’t be identified. Your UM coverage will help pay for your injuries and, depending on your state and policy, your vehicle damage as well.
How Much Does UM Coverage Cost?
Uninsured motorist coverage is surprisingly affordable, often adding only $20 to $50 per year to your premium. Given that it protects you against one of the most common and financially devastating driving risks, it’s one of the best values in auto insurance. Many financial advisors consider it essential coverage that should match your liability limits.
