Uninsured and Underinsured Motorist Coverage Explained
Uninsured and Underinsured Motorist Coverage is a common term in the insurance industry. If you are a driver or would-be driver, you need to understand this auto insurance policy and what it covers. Understanding the term will help you determine whether you need the coverage in the first instance or not. It is not enough to buy an insurance policy, you should be able to know why you are buying it. Due to ignorance, you see some drivers buying a policy that may not be necessary.
What is Uninsured and Underinsured Motorist Coverage?
Underinsured is used to described a situation where by a driver does not have enough coverage in his policy. It is possible that the driver just buy the minimum liability coverage. In most cases, the minimum liability coverage is not enough to pay for liability in case of any accident. In this regard, if you are hit with a driver with insufficient liability coverage, your underinsured coverage will come into play after the liability limit of the driver that hit you has been exhausted.
Read Also: Car Insurance: Understanding Collision Coverage
Uninsured motorist coverage, on the other hand, protects you from people without any liability coverage at all or the hit and run kind of drivers. Does it sound strange to you? Well, it is true that most states require that drivers should carry car insurance, the reality is that some of the drivers you see on the roads flout the law. If you drive in any of the states where the rates of uninsured drivers are very high, it may be safe to carry uninsured and
underinsured motorist coverage. The top ten states where there are high percentage of uninsured drivers based on the report from the Insurance Research Council (IRC) are listed below:
Uninsured Drivers by State
| S/N | State | % |
| 1 | Oklahoma | 25.9% |
| 2 | Florida | 23.8% |
| 3 | Mississippi | 22.9% |
| 4 | New Mexico | 21.6% |
| 5 | Michigan | 21.0% |
| 6 | Tennessee | 20.1% |
| 7 | Alabama | 19.6% |
| 8 | Rhode Island | 17.0% |
| 9 | Colorado: | 16.2% |
| 10 | Washington | 16.1% |
What does this mean to you? It suggests that if you are hit in an accident, there is tendency that the driver that hit you may be uninsured. If you don’t have proper and adequate car insurance policy, two things may likely happen. You are going to pay for any damage caused by the accident out of your pocket if the driver runs away. If you drive a very expensive car, the cost of repairs may be very high for you to bear. The second option is to sue the driver so that you can make him pay for the damage. So, the question you may want to ask is that, do you need uninsured motorist coverage? If you need it, how much of it do you need to buy?
Read Also: Car Insurance: Understanding Medical Payments Coverage
Uninsured and underinsured motorist coverage in most cases is sold as one package but it is divided into uninsured and underinsured motorist bodily injury coverage and uninsured and underinsured motorist property damage coverage.
Uninsured and underinsured motorist bodily injury coverage: This covers your medical expenses and that of your passengers resulting from the injury you suffer if you are hit by uninsured or hit and run driver. If you bundle uninsured with underinsured motorist bodily injury coverage, it will pay for damage caused by anyone who is at-fault and has bodily injury liability limits that are less than your UIM limits and the limits are not enough to cover the losses of those injured. It may also pay for income loss, pain and suffering and other associate costs arising from such an accident. Uninsured bodily injury coverage is without deductibles. It will pay you up to the limits of your coverage. However this does not pay for any damage caused to your car.
Uninsured and underinsured motorist property damage coverage: This will pay for the damage caused to your car by uninsured or underinsured driver after deducting your deductibles. For the underinsured, your policy will only come to play after the underinsured driver who is at fault must have exhausted his limits. Uninsured motorist property damage coverage works just like collision coverage except that it has a lower deductible. Therefore, if you already have collision coverage, it may amount to duplication buying uninsured motorist property damage coverage.
Why uninsured and underinsured motorist property damage coverage?
All drivers are required by law in most states to be insured. Ordinarily, if there is full compliance to this law, there wouldn’t have been any need for uninsured motorist coverage. But because of those drivers who might not comply with the law or those drivers that only buy minimum liability coverage which may make them to be underinsured and other reckless drivers on the roads who may hit you and run away, the uninsured and underinsured motorist coverage becomes paramount.
In some U.S. states, you are required to carry uninsured motorist coverage while in some states, a combination of uninsured and underinsured motorist coverage is required. In other states, you will only be required to carry uninsured motorist coverage while you can choose to skip underinsured motorist coverage. Even in some states where you are not required to carry uninsured motorist coverage, they will still offer you the coverage but you are at the liberty to reject the offer in writing.
Read Also: 11 Risk Factors Determining Your Car Insurance Premium
States Car Insurance Laws
The table below provides you a guide on the insurance laws as being operated in different states. It shows the types of coverage required by law and the minimum liability limits that every driver is expected to carry. However, you should understand that these minimum liability limits may not be sufficient for you. Therefore, you may need to buy additional coverage. You should also note that state’s laws change from time to time, you will need to find out the current applicable laws in your state.
| State/Type of Required Coverage | Minimum Liability Limits |
| Alabama: BI & PD liab | 25/50/25 |
| Alaska: BI & PD liab | 50/100/25 |
| Arizona: BI & PD liab | 15/30/10 |
| Arkansas:BI & PD liab | 25/50/25 |
| California: BI & PD liab | 15/30/5 |
| Colorado: BI & PD liab | 25/50/15 |
| Connecticut: BI & PD liab, Uninsured/UIM | 20/40/10 |
| Delaware: BI & PD liab, PIP | 15/30/10 |
| District of Columbia: BI & PD liab, UM | 25/50/10 AND UM of $25,000 UM/UIM coverage per person $50,000 UM/UIM coverage per accident $5,000 UM/UIM PD coverage per accident |
| Florida: PD Liability, PIP | 10/20/10 |
| Georgia: BI & PD | 25/50 per incident/25 |
| Hawaii: BI & PD liab, PIP | 20/40/10 |
| Idaho: BI & PD liab | 25/50/10 |
| Illinois: BI & PD liab, UM | 25/50/20, UM is $25,000 per person, $50,000 total per accident. |
| Indiana: BI & PD liab, UM | 25/50/10, UM is equal to the minimum limits for liability coverage |
| Iowa: All motorists must be able to prove financial responsibility in the event of an accident. If you do purchase car insurance, at minimum must buy BI & PD liab | Insurance not compulsory, but if you do purchase, must be 25/40/15 |
| Kansas: BI & PD liab, PIP, UM | 25/50/25, and PIP (PIP or No Fault) Uninsured/Underinsured$25,000/person$50,000/accident Survivor Benefits: Disability/loss of income up to $900/month for one year In-home services up to $25/day for one year $4,500/person for medical expenses $900/month for one year for disability/loss of income $25/day for in-home services $2,000 for funeral, burial or cremation expense $4,500 for rehabilitation expense |
| Kentucky: BI & PD liab, PIP | 25/50/10 and 10 (PIP) |
| Louisiana: BI & PD liab | 15/30/25 |
| Maine: BI & PD liab, UM/UIM |
50/100/25 plus: $50,000 UM coverage per person $100,000 UM coverage per accident $2,000 medical payments coverage |
| Maryland: BI & PD liab, PIP, UM | 30/60/15 |
| Massachusetts: BI & PD liab, PIP, UM |
20/40/5 and $20,000 UM coverage per person $40,000 UM coverage per accident $8,000 PIP |
| Michigan: BI & PD liab, PIP | 20/40/10 |
| Minnesota: BI & PD liab, PIP, Uninsured/UIM | 30/60/10, Liability, PIP $20,000 for medical coverage.$20,000 for loss of income UM 25/50. |
| Mississippi:BI & PD | 25/50/25 |
| Missouri: BI & PD liab, UM | 25/50/10 and UM coverage of $25,000 for bodily injury per person and $50,000 for bodily injury per accident |
| Montana: BI & PD liab | 25/50/10 |
| Nebraska: BI & PD liab | 25/50/25 |
| Nevada: BI & PD liab | 15/30/10 |
| New Hampshire: Not required to purchase car insurance, but if you do, there are mandatory minimums | 25/50/25 |
| New Jersey: BI & PD liab, PIP | 15/30/5 and $15,000 PIP |
| New Mexico: BI & PD liab | 25/50/10 |
| New York: BI & PD liab, PIP, UM | 25/50/10 |
| North Carolina: BI & PD liab | 30/60/25 |
| North Dakota: BI & PD liab, PIP, UM | 25/50/25, UM must be $25,000 per person/ $50,000 per accident. |
| Ohio: Demonstrate Financial Responsibility (FR) or maintaining minimum insurance | 25/50/35 |
| Oklahoma: BI & PD liab | 25/50/25 |
| Oregon: BI & PD liab, PIP, UM | 25/50/25 |
| Pennsylvania: BI & PD liab, PIP | 15/30/5 |
| Rhode Island: BI & PD liab, UM | 25/50/25 |
| South Carolina: BI & PD liab, UM | 25/50/25 |
| South Dakota: BI & PD liab, UM | 25/50/25 |
| Tennessee: BI & PD liab | 25/50/15 |
| Texas: BI & PD liab | 30/60/25 |
| Utah: BI & PD liab, PIP | 25/65/15 |
| Vermont: BI & PD liab, Uninsured/UIM | 25/50/10 |
| Virginia: Can either purchase minimum liability or pay UM fee | 25/50/20 |
| Washington: BI & PD liab | 25/50/10 |
| West Virginia: BI & PD liab, UM | 25/50/25 |
| Wisconsin: BI & PD liab | 10/25/50 |
| Wyoming: BI & PD liab | 25/50/20 |
Note: UM = Uninsured Motorist, UIM = Underinsured Motorist, BI = Bodily Injury, PD = Property Damage,