Uninsured Motorist Coverage: Do You Really Need It on Your Policy?

For most drivers, yes. Uninsured and underinsured motorist coverage, usually abbreviated UM/UIM, is the one part of a standard auto policy that pays you when the driver who caused the crash carries no insurance, carries too little, or leaves the scene before anyone catches a plate number. Liability coverage pays other people when you are at fault. UM/UIM works in the opposite direction: it protects you when someone else is at fault and cannot pay what they owe.

What the coverage does

The National Association of Insurance Commissioners describes uninsured motorists coverage as protection for the policyholder directly, paying if you are injured by a hit-and-run driver or by a driver who has no auto insurance. The Texas Department of Insurance describes the same coverage as paying the medical expenses and vehicle repair bills that the at-fault driver cannot pay.

That final phrase is the heart of it. Without this coverage, an at-fault driver with nothing leaves you holding your own medical bills and your own repair estimate, and your only path to recovery is a lawsuit against someone who, by definition, could not afford insurance in the first place.

Uninsured and underinsured are separate problems

The two halves of UM/UIM address related but distinct situations, and it helps to know which one you are counting on.

• Uninsured motorist: the at-fault driver had no liability insurance whatsoever.
• Hit-and-run: the driver fled and was never identified. Washington's insurance regulator notes that this coverage may help pay for damage and injury caused by a hit-and-run or a phantom vehicle.
• Underinsured motorist: the driver was insured, but the limits were exhausted before your bills were. This is the more frequent scenario, because state minimum liability limits are small compared with the real cost of a serious injury.
• Crashes out of state: some states fold this in. New York's supplementary uninsured/underinsured motorists coverage, known as SUM, covers accidents that happen outside the state.

You may be carrying it already

Many states do not treat this coverage as purely optional. Instead, they require the insurer to present it to you and make you turn it down on purpose. In Texas, the Department of Insurance says insurers must offer the coverage, and that if you do not want it you have to tell the company in writing. New York counts uninsured motorists coverage among its required coverages and requires insurers to include SUM coverage equal to your bodily injury liability limits unless you decline it entirely or choose a lower amount.

The practical consequence is that a written rejection you signed years ago may still be shaping your policy today. Pull out your declarations page and look for a UM or UIM line. If it is not there and your state requires insurers to offer it, it was most likely declined at some point rather than never offered. How the coverage is offered, priced, and stacked varies by state, so confirm the details with your own state's insurance department.

How it differs from collision and PIP

Drivers often assume other coverages already handle this, and in part they do. Washington's insurance regulator points out that without uninsured motorist coverage, collision may still pay for your damaged car and personal injury protection may still pay for injuries related to the accident. The gap lies in what those coverages do not reach: collision pays for the vehicle but not for your injuries, personal injury protection stops at its own limit, and collision still leaves you paying a deductible on a crash you did not cause.

There is also a deductible question specific to UM/UIM. The Texas Department of Insurance notes that in Texas you must meet a deductible on UM/UIM claims, just as with collision and comprehensive. Whether and how a deductible applies is decided at the state level, so read your own policy instead of assuming.

When it is worth keeping

The argument for carrying UM/UIM is strongest in the situations where going without would hurt the most.

• You have meaningful income or assets and would feel a long interruption in earnings after a serious injury.
• Your health plan has a high deductible, so injury bills would hit you first.
• Uninsured driving is common where you live, which your state insurance department or DMV can often tell you.
• You carry high liability limits. There is a reasonable argument that protection for your own household should not sit far below what you bought for strangers.
• You commute a lot or regularly carry passengers, which increases the number of people whose injuries could exceed a minimum-limits policy.

How to check it and adjust it

Begin with your declarations page and locate the UM and UIM limits, if any are listed. Set them beside your bodily injury liability limits. If the UM figure is much lower, ask your insurer what raising it would cost. Because the coverage pays only in the narrow circumstances described above, the cost of increasing it is often modest relative to what it adds, although the price depends on your state, your insurer, and your own rating factors. If you price the policy with your current insurer and one or two others, the NAIC's advice applies as much here as anywhere: give every agent or company the same information, including the coverages and limits you want, so the figures you get back line up.

Not sure how UM/UIM fits your own policy? Lanewise Auto offers plain-English guidance. Tell us what you want help with, email contact@lanewiseauto.com, or call (888) 905-2130, and we will go through your declarations page with you. Nothing to buy, no obligation.

The bottom line

Uninsured and underinsured motorist coverage is a small line on the policy that handles a risk you cannot control: the financial situation of whoever hits you. Most drivers should keep it, and many already have it without realizing, because their state required the insurer to offer it. Check your declarations page, measure the limits against your liability limits, and confirm your state's rules with its insurance department before you drop or reduce anything.