Despite insurance being mandatory in most states, not every driver on the road actually carries it — and many who do carry only the legal minimum. Uninsured and underinsured motorist coverage exists specifically to protect you from the financial fallout when the other driver can’t (or won’t) pay for the damage they caused.
The Core Problem This Coverage Solves
Liability insurance is designed so that at-fault drivers pay for the harm they cause to others. But that system only works if the at-fault driver actually has insurance — and has enough of it. Two common scenarios break this system:
- The other driver has no insurance at all (uninsured)
- The other driver has insurance, but their liability limits are too low to cover your full damages (underinsured)
In both situations, you could be left covering your own medical bills, lost wages, and vehicle damage out of pocket, even though the accident wasn’t your fault. Uninsured/underinsured motorist coverage steps in to fill that gap.
Uninsured Motorist (UM) Coverage
UM coverage applies when the at-fault driver has no insurance whatsoever, or in some cases when a hit-and-run driver can’t be identified. It typically comes in two forms:
- Uninsured Motorist Bodily Injury (UMBI): Covers your medical expenses, lost wages, and sometimes pain and suffering if an uninsured driver injures you or your passengers.
- Uninsured Motorist Property Damage (UMPD): Covers damage to your vehicle caused by an uninsured driver. Not all states offer this as a standalone option — in some, property damage from an uninsured driver is instead handled through your collision coverage.
Underinsured Motorist (UIM) Coverage
UIM coverage applies when the at-fault driver does have insurance, but their liability limits aren’t high enough to cover the full cost of your injuries or damage. For example, if your medical bills and other losses exceed what the at-fault driver’s liability policy pays out, UIM coverage can pick up some or all of the remaining difference, up to your own UIM policy limits.
Why This Coverage Matters More Than People Realize
A meaningful percentage of drivers on U.S. roads are uninsured at any given time, and the percentage varies significantly by state. about 1 in 7 drivers nationally, or roughly 15%, according to the Insurance Research Council, ranging from under 6% in states like Maine to over 25% in states like Mississippi and New Mexico. Even among insured drivers, many carry only their state’s minimum required liability limits, which may not come close to covering a serious injury claim. This means the risk of being hit by an uninsured or underinsured driver is real and not a rare edge case — it’s a common enough scenario that many insurance professionals consider this coverage essential.
Is Uninsured/Underinsured Motorist Coverage Required?
This varies significantly by state. Some states require insurers to offer it (and drivers can decline in writing), some make it mandatory, and others leave it fully optional. roughly half the states require insurers to include it automatically or require drivers to reject it in writing, while the rest leave it fully optional
Because the requirements differ so much, it’s worth explicitly checking your policy declarations page to see whether you have this coverage and at what limits — some drivers are surprised to learn they’ve waived it without realizing the implications.
How a Claim Works
If you’re hit by an uninsured or underinsured driver:
- You (or your insurer) confirm the at-fault driver’s insurance status.
- If they’re uninsured, you file a claim directly against your own UM coverage.
- If they’re underinsured, you typically first claim against their liability policy, then file a claim against your UIM coverage for the remaining amount, up to your policy’s limits.
- Your own insurer handles the claim similarly to how a liability claim would work, evaluating your medical bills, lost wages, and other documented losses.
An interesting quirk: even though you’re filing a claim on your own policy, this type of claim generally shouldn’t be treated the same as an at-fault claim for premium purposes, since the accident wasn’t your fault. Policies and state regulations vary on this, so it’s worth confirming with your specific insurer. in most states, a UM/UIM claim for an accident that wasn’t your fault shouldn’t be treated the same as an at-fault claim for premium purposes, though it’s worth confirming with your specific insurer
How Much Coverage to Carry
A common approach is to match your UM/UIM limits to your bodily injury liability limits, so you’re not more exposed to an uninsured driver’s mistakes than you’d be to your own. Given how many drivers carry only minimum liability coverage, carrying UIM limits meaningfully above the state minimum can provide real protection in a serious accident. a common approach is to match your UM/UIM limits to your bodily injury liability limits
Who Should Prioritize This Coverage
- Drivers in states with higher uninsured driver rates
- Anyone without robust health insurance, since UM/UIM can help cover medical costs after an accident
- Drivers who regularly travel on highways or in areas with heavy traffic
- Anyone who wants a financial safety net that doesn’t depend on another driver’s insurance choices
The Bottom Line
Uninsured and underinsured motorist coverage protects you from the reality that not every driver on the road is properly insured. It fills the gap between what an at-fault driver’s insurance (or lack thereof) can pay and what you actually need to cover your injuries or damage. Given how often this scenario occurs, it’s one of the more underrated coverages worth reviewing carefully on your policy.
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