If another driver hits your vehicle, you might expect that person’s insurance to pay for your injuries. But what if they don’t have coverage?
Enter uninsured and underinsured motorist insurance — coverage that’s intended to spare you from shelling out your own money to pay medical bills for crashes you didn’t cause. In some states, it’s required, but you can get it in others. Generally, it doesn’t cost much to add to your auto policy. Here’s what else to know.
Uninsured motorist coverage at a glance
Names it goes by: Uninsured motorist coverage, UM, and uninsured motorist bodily injury coverage, or UMBI. Sometimes it’s referred to as uninsured/underinsured motorist protection because in many states, UMBI also pays if someone doesn’t have enough insurance to cover injuries they cause you or your passengers in a wreck.
When you would use it: If you or your passengers are hurt in a crash caused by an uninsured driver, or one without enough insurance to cover costs related to your injuries. Some insurers will allow you to make a claim against your UMBI if you were the victim of a hit-and-run.
What it pays for: Medical bills for injuries you or your passengers suffer. You may also be reimbursed for lost wages, pain and suffering and other damages.
Also good to know: There’s a separate option that pays for damage caused to your car or other property, called uninsured motorist property damage coverage, or UMPD. If you make a claim on that coverage, you might have to pay a deductible, depending on your state. Some states require UMBI coverage only, while UMPD is optional. In other places, both are either optional or mandatory.
Alternative: Health insurance will pay for medical treatment after a wreck. However, if the at-fault driver has auto insurance and you receive any reimbursement for injuries, your health insurer may demand a portion of it. This is true even if the claim check doesn’t cover your out-of-pocket expenses because your health insurer likely expects the person who caused your injuries to pay the resulting medical bills. If the driver is completely uninsured (and not just underinsured) you wouldn’t have to worry about your health insurer seeking a portion of your UMBI coverage.
Who needs uninsured motorist coverage
Drivers in 18 states and the District of Columbia are required to carry uninsured motorist coverage. Car insurance isn’t mandatory in New Hampshire, but if drivers there purchase it, policies must include UMBI. In other states, you may be required to reject the coverage in writing if you don’t want it.
Even if uninsured and underinsured motorist insurance aren’t required where you live, there may still be good reason to have the extra security they provide. Roughly 13% of drivers nationwide — or about 1 in 8 — drive uninsured, according to the Insurance Research Council.
Since uninsured motorist coverage may pay out if you’re hit by an underinsured driver, it can also be useful if you’re hit by someone with minimum required insurance. In many states, minimum liability limits for bodily injury are $15,000 or less — injuries after a bad crash could easily exceed that amount.
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The cost of uninsured motorist coverage
Typically, UMBI costs less than half the price you pay for liability coverage.
Compared with other types of coverage in an auto policy, prices for UMBI are relatively low. Since liability insurance is meant to protect your assets should you cause a wreck, you would want the same financial assurance if someone else caused the wreck. For that reason, it’s standard to purchase uninsured motorist protection in at least the same amounts as your liability limits. So, the more assets you have to your name and the more liability insurance you purchase, the higher your costs for uninsured motorist coverage are likely to be.
Still, uninsured motorist coverage is cheaper than liability coverage when purchased in the same amounts — generally less than half the cost.