Uninsured and Underinsured Motorist Coverage Explained
Uninsured and underinsured motorist coverage can help protect you when another driver causes an accident but does not have enough insurance to cover the resulting losses. Learn how UM and UIM coverage works, what it may pay for, how limits and deductibles affect claims, and why the coverage can be different from ordinary liability insurance.
When you buy car insurance, you are generally protecting yourself against several different financial risks. One of those risks is being injured or suffering losses because another driver caused an accident but has little or no insurance available to pay for it.
This is where uninsured motorist (UM) and underinsured motorist (UIM) coverage can become important.
An uninsured driver may have no liability insurance at all. An underinsured driver may have insurance, but the available liability limits may be insufficient to cover the losses caused by the accident.
UM and UIM coverage can provide another layer of financial protection, although the exact coverage varies significantly by policy and jurisdiction.
What Is Uninsured Motorist Coverage?
Uninsured motorist coverage is insurance that can protect an insured person when they suffer a covered loss caused by a driver who does not have applicable liability insurance.
The basic problem is straightforward.
Imagine another driver causes an accident. You suffer injuries and incur medical expenses. You also lose income because you cannot work for several weeks. You discover that the driver has no liability insurance.
Without uninsured motorist coverage, you may have to pursue the responsible driver personally, rely on another applicable source of insurance, or absorb some losses yourself, depending on the circumstances and local law.
UM coverage can potentially provide benefits under your own auto insurance policy when the legal and policy requirements for an uninsured motorist claim are satisfied.
What counts as uninsured?
The exact definition depends on the policy and jurisdiction. Generally, an uninsured motorist is a driver who does not have liability insurance available for the accident.
Certain situations involving hit-and-run drivers may also qualify under uninsured motorist provisions in some policies, subject to specific requirements.
What Is Underinsured Motorist Coverage?
Underinsured motorist coverage addresses a different problem: the other driver has insurance, but the available insurance is not enough to cover the losses caused by the accident.
Suppose another driver causes an accident and has liability insurance with a $25,000 bodily injury limit. Your covered losses total $70,000.
The other driver's policy may not provide enough money to cover the entire loss.
Depending on the law and policy terms, underinsured motorist coverage could potentially provide additional protection up to the applicable UIM limits.
Your covered losses: $70,000
At-fault driver's available liability insurance: $25,000
Potential unpaid portion: $45,000
If your UIM policy provides applicable coverage for the remaining loss, it may help address some or all of that gap, subject to the policy's limits, offsets, exclusions, and other requirements.
Uninsured vs Underinsured Motorist Coverage
The simplest distinction is whether the at-fault driver's insurance is completely absent or simply insufficient.
| Coverage | Other Driver | Potential Purpose |
|---|---|---|
| Uninsured Motorist | No applicable liability insurance | Can help protect against covered losses caused by an uninsured driver. |
| Underinsured Motorist | Has insurance, but limits may be insufficient | Can potentially help with covered losses exceeding the other driver's available liability coverage. |
| Liability Insurance | You cause damage or injury to others | Generally protects against covered liability claims you are legally responsible for. |
| Collision Coverage | Vehicle is damaged in a covered collision | Generally protects your own vehicle from covered collision damage. |
Why Is Uninsured and Underinsured Motorist Coverage Important?
Auto accidents can create costs far beyond the visible damage to a vehicle.
Depending on the circumstances, an injured person may face medical treatment, rehabilitation, lost income, transportation expenses, and other financial consequences.
If the person responsible for the accident does not have enough insurance or financial resources, collecting compensation can become difficult.
UM and UIM coverage can therefore serve as a form of financial protection against the insurance shortfall created by another driver.
Protection Against Uninsured Drivers
UM coverage can potentially respond when an at-fault driver has no applicable liability insurance.
Protection Against Low Limits
UIM coverage can potentially respond when the at-fault driver's insurance limits are insufficient for the covered loss.
Potential Injury Protection
Depending on the policy, UM/UIM bodily injury coverage can address certain injury-related losses.
Additional Financial Security
Coverage can provide another potential source of recovery when the responsible driver's insurance is unavailable or inadequate.
What Does Uninsured and Underinsured Motorist Coverage Cover?
UM and UIM coverage can be divided into different forms. The exact combination depends on the insurer and jurisdiction.
Uninsured motorist bodily injury
This coverage may help with certain injury-related losses caused by an uninsured driver.
Underinsured motorist bodily injury
This coverage may help when the at-fault driver's liability insurance is not sufficient to cover qualifying injury-related losses.
Uninsured motorist property damage
Some insurance systems offer protection for vehicle or property damage caused by an uninsured driver. Availability and rules vary.
Underinsured motorist property damage
Some policies or jurisdictions may provide property-damage protection when another driver's available coverage is insufficient.
What Is Uninsured Motorist Bodily Injury Coverage?
Uninsured motorist bodily injury coverage is generally designed to protect covered people from certain injury-related losses caused by an uninsured driver.
Depending on the jurisdiction and policy, covered losses can potentially include medical expenses and other qualifying damages arising from the bodily injury.
Some policies can also extend to passengers or family members under specified circumstances.
The important point is that UM bodily injury coverage is not simply another version of health insurance. It exists within the auto insurance contract and is governed by that contract and applicable law.
What Is Uninsured Motorist Property Damage Coverage?
Uninsured motorist property damage coverage, where available, is designed to address certain property damage caused by an uninsured driver.
This can be useful when another driver causes an accident but has no liability insurance available to pay for the damage.
However, property-damage UM coverage is not structured the same way everywhere. Some jurisdictions use other mechanisms to handle these losses, and some policies may impose deductibles or special conditions.
If your own vehicle is damaged in a collision, your collision coverage may also be relevant.
Read Provenzy's Collision vs Comprehensive Insurance guide to understand the distinction between collision and comprehensive physical-damage coverage.
Real-World Examples of UM and UIM Coverage
Example 1: The other driver has no insurance
You are driving legally when another driver runs a red light and causes a serious accident. You suffer injuries, but the other driver has no applicable auto liability insurance.
If you carry qualifying uninsured motorist bodily injury coverage, you may be able to make a claim under your own policy, subject to its terms and local requirements.
Example 2: The other driver has very low limits
Another driver causes an accident. The driver's insurance provides $25,000 of applicable bodily injury coverage, but your qualifying losses are $80,000.
The other driver's policy may provide up to its available limit. If you have UIM coverage that applies, it may provide additional benefits subject to your own policy limits and the rules governing the claim.
Example 3: A hit-and-run
Another vehicle hits you and leaves the scene. The driver cannot be identified.
In some jurisdictions, a qualifying hit-and-run can be treated under uninsured motorist provisions. However, insurers may require specific evidence and reporting procedures before accepting the claim.
Example 4: Minor accident, no insurance
An uninsured driver causes a relatively minor accident resulting in limited vehicle damage.
Depending on your policy and deductible, you may have multiple potential insurance pathways. The cost of the damage, applicable deductibles, and the availability of UM property-damage coverage can all matter.
Understanding Uninsured and Underinsured Motorist Coverage Limits
Coverage limits determine how much an insurer may be obligated to pay for qualifying losses under a particular coverage.
UM and UIM limits can be structured differently depending on the policy and jurisdiction.
A policy might, for example, list bodily injury limits as:
- $25,000 per person / $50,000 per accident
- $50,000 per person / $100,000 per accident
- $100,000 per person / $300,000 per accident
These numbers are illustrative. The actual limits available to you depend on the policy you purchased.
Per-person limits
A per-person limit generally represents the maximum applicable amount for bodily injury to one covered person under the relevant coverage.
Per-accident limits
A per-accident limit generally represents the maximum applicable amount for covered bodily injury claims arising from one accident.
If several people are injured in one accident, the per-accident limit can become particularly important.
Simple UIM Coverage Gap Calculator
This calculator provides a simple illustration of how an insurance shortfall might look when another driver's available liability coverage is lower than your qualifying losses.
Does Uninsured Motorist Coverage Have a Deductible?
Whether UM or UIM coverage has a deductible depends on the type of coverage, policy, and jurisdiction.
Bodily injury UM/UIM coverage may operate differently from property-damage coverage. Some property-damage claims may have a deductible, while others may be subject to different rules.
Do not assume that the deductible shown for your collision coverage automatically applies to every UM or UIM claim.
Review your declarations page and policy wording to determine the applicable deductible.
Does Uninsured Motorist Coverage Cover Hit-and-Run Accidents?
In some jurisdictions, uninsured motorist coverage can apply to qualifying hit-and-run accidents because the responsible driver is unidentified or lacks available insurance.
However, insurers may impose specific requirements for establishing that a hit-and-run occurred.
These requirements can include:
- Promptly reporting the accident.
- Contacting law enforcement when required.
- Providing information about the vehicle or incident.
- Obtaining witness information when available.
- Providing photographs or other evidence.
- Cooperating with the insurer's investigation.
The exact rules vary. If you are involved in a hit-and-run, follow the reporting requirements in your location and your insurance policy.
How Coverage Limits Can Affect a Claim
Consider a hypothetical accident involving three injured people.
| Person | Qualifying Loss | Illustrative Other Driver Limit |
|---|---|---|
| Person A | $60,000 | $25,000 per person |
| Person B | $30,000 | $25,000 per person |
| Person C | $20,000 | $25,000 per person |
In this simplified example, the at-fault driver's policy limits may not be enough to fully compensate every injured person.
The per-person and per-accident limits both matter. Depending on local law and the applicable policy, UIM coverage may provide additional protection to eligible insured people.
Uninsured Motorist Coverage vs Liability Insurance
Liability insurance and uninsured motorist coverage address opposite sides of an accident risk.
| Coverage | Primary Purpose | Who Is the Main Concern? |
|---|---|---|
| Liability | Protects against covered claims you are legally responsible for causing. | Other people affected by your actions. |
| Uninsured Motorist | Can protect covered insured people when an at-fault driver has no applicable insurance. | You and other eligible insured people. |
| Underinsured Motorist | Can potentially address covered losses exceeding an at-fault driver's available liability insurance. | You and other eligible insured people. |
| Collision | Generally covers covered physical damage to your vehicle from a collision. | Your insured vehicle. |
For more information about liability coverage, see Provenzy's What Is Liability Car Insurance?
Do You Need Uninsured and Underinsured Motorist Coverage?
Whether this coverage is appropriate depends on your location, available insurance options, policy costs, financial circumstances, and the level of protection you want.
Factors worth considering include:
- Whether UM/UIM coverage is legally required where you live.
- How common uninsured driving is in your area.
- The liability limits commonly carried by other drivers.
- Your health insurance and other potential sources of financial protection.
- Your income and ability to absorb a major financial loss.
- Your preferred level of insurance protection.
- The additional premium for UM/UIM coverage.
Even when coverage is optional, understanding the risk it addresses can help you make a more informed insurance decision.
How to Make an Uninsured or Underinsured Motorist Claim
The claims process varies, but several steps are commonly important.
1. Get to safety
Move away from immediate danger when possible and seek emergency assistance if anyone is injured.
2. Contact authorities when appropriate
Follow local requirements for reporting the accident. This is particularly important for hit-and-run or suspected uninsured-driver situations.
3. Gather information
Collect the other driver's information, insurance information, witness details, photographs, videos, and other relevant evidence when it is safe and lawful to do so.
4. Notify your insurer
Contact your insurance company promptly and explain that another driver may be uninsured or underinsured.
5. Document your losses
Keep medical bills, treatment records, proof of lost income, repair estimates, receipts, and other relevant documentation.
6. Cooperate with the investigation
The insurer may investigate fault, coverage, injuries, damages, available limits, and other circumstances.
7. Review the claim carefully
Understand the applicable limits, exclusions, offsets, deductibles, and other policy provisions before accepting or resolving a claim.
Common Mistakes With UM and UIM Coverage
Mistake 1: Assuming every driver has enough insurance
A driver's possession of an insurance policy does not necessarily mean that the policy has enough limits to cover a serious accident.
Mistake 2: Confusing UM with UIM
UM generally addresses situations where the responsible driver has no applicable insurance. UIM generally addresses situations where the responsible driver has insurance but insufficient limits.
Mistake 3: Looking only at the premium
A small difference in premium can represent a meaningful difference in potential protection, depending on the coverage limits.
Mistake 4: Assuming collision coverage replaces UM/UIM
Collision coverage primarily concerns physical damage to your own vehicle from covered collisions. UM/UIM coverage can address a different risk, particularly injury-related losses caused by an uninsured or underinsured driver.
Mistake 5: Ignoring policy limits
Having UM/UIM coverage does not necessarily mean unlimited protection. Your policy limits and applicable law remain important.
How to Compare UM and UIM Coverage
When comparing auto insurance policies, look beyond the premium and determine exactly what UM and UIM coverage is included.
| Feature | Question to Ask |
|---|---|
| UM bodily injury | Is bodily injury caused by an uninsured driver covered? |
| UIM bodily injury | Can coverage respond when the responsible driver's limits are insufficient? |
| Property damage | Does the policy provide uninsured motorist property-damage protection? |
| Limits | How much protection is available per person and per accident? |
| Deductible | Does a deductible apply? |
| Hit-and-run | Can qualifying hit-and-run accidents trigger coverage? |
| Exclusions | Which situations are excluded? |
For broader car insurance comparison guidance, visit Provenzy's How to Compare Car Insurance Quotes .
A Detailed Example: Why UIM Can Matter
Consider a driver named Daniel who is seriously injured after another driver causes an accident.
Daniel's qualifying losses total $120,000. The other driver carries $50,000 of applicable bodily injury liability coverage.
The other driver's insurance therefore may not be enough to cover Daniel's qualifying losses.
Total qualifying loss: $120,000
Other driver's available liability coverage: $50,000
Potential shortfall: $70,000
If Daniel has qualifying UIM coverage with sufficient applicable limits, that coverage could potentially provide additional compensation toward the covered shortfall, subject to the policy and governing law.
This example does not mean every $70,000 shortfall will automatically be paid. UIM claims can involve policy limits, offsets, exclusions, proof of damages, fault, settlement requirements, and other legal and contractual issues.
How UM/UIM Fits With Other Car Insurance Coverage
Auto insurance is made up of several different coverages, each designed to address a different risk.
| Coverage | General Purpose |
|---|---|
| Liability | Covered injuries or property damage you are legally responsible for causing to others. |
| Collision | Covered damage to your vehicle resulting from a collision. |
| Comprehensive | Covered non-collision losses such as theft, vandalism, hail, fire, or falling objects. |
| UM | Can protect eligible insured people from covered losses caused by uninsured motorists. |
| UIM | Can potentially provide additional protection when the responsible driver's liability insurance is insufficient. |
| PIP / Medical Payments | May provide specified medical or related benefits depending on the policy and jurisdiction. |
These coverages are not interchangeable. Having one does not necessarily mean you have the protection provided by another.
Frequently Asked Questions
Uninsured motorist coverage can provide protection for eligible insured people when they suffer covered losses caused by a driver who has no applicable liability insurance.
Underinsured motorist coverage can potentially provide additional protection when an at-fault driver's available liability insurance is insufficient to cover qualifying losses.
UM generally addresses an at-fault driver who has no applicable insurance, while UIM generally addresses an at-fault driver whose available insurance is insufficient.
In some jurisdictions, qualifying hit-and-run accidents can be handled under uninsured motorist coverage. Specific reporting and evidence requirements may apply.
UM bodily injury coverage may provide benefits for certain injury-related losses, depending on the policy and applicable law.
Property-damage protection varies by jurisdiction and policy. Collision coverage may also be relevant when your vehicle is damaged in a covered collision.
Requirements vary by jurisdiction. Some places require certain forms of UM coverage, while others make it optional.
Requirements vary. Some jurisdictions regulate or require certain UIM protections, while others allow drivers to choose whether to purchase them.
It depends on the coverage and jurisdiction. Bodily injury and property-damage UM coverage can have different rules.
In many policies, eligible passengers can receive certain benefits, but who qualifies as an insured person depends on the policy and applicable law.
Potentially, if the other driver's applicable insurance is insufficient and the requirements for a UIM claim are satisfied.
No. Liability insurance generally protects against covered claims arising from your responsibility for injuries or property damage to others. UIM coverage addresses certain losses caused by another driver whose insurance is insufficient.
No. Collision coverage generally protects your vehicle from covered collision damage. UM coverage addresses covered losses caused by an uninsured driver and may include bodily injury protection depending on the policy.
There is no single amount appropriate for every driver. Consider local requirements, your other insurance, financial circumstances, available limits, and the level of protection you want.
The Bottom Line
Uninsured and underinsured motorist coverage is designed to address a specific problem: another driver causes an accident, but that driver's insurance is either nonexistent or insufficient.
Uninsured motorist coverage generally addresses situations involving drivers without applicable liability insurance. Underinsured motorist coverage generally addresses situations where the responsible driver's available insurance is not enough to cover qualifying losses.
The coverage can be particularly important because a serious accident can create financial losses far beyond vehicle repair costs.
When reviewing an auto insurance policy, look at the actual UM and UIM limits, whether bodily injury and property damage are covered, applicable deductibles, exclusions, hit-and-run rules, and other policy conditions.
Understanding these details before an accident occurs gives you a clearer picture of the protection your auto insurance actually provides.
