Getting into a car accident never makes for a good day. But it can become significantly worse if a motorist hits you and they have insufficient auto insurance coverage, which means either no insurance (uninsured) or little insurance (underinsured). So, to fix this problem, many states now require or recommend you add either uninsured or underinsured motorist coverage to your car insurance policy.
What’s the difference between uninsured underinsured motorist coverage, and which one should you consider?
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According to The Insurance Research Council, 1 in 8 drivers has insufficient car insurance. Due to the high ratio of motorists driving without proper insurance, insurance providers are offering these add ons to policies: uninsured and underinsured motorist coverage. The primary reason these add ons exist is to prevent you from having to pay out-of-pocket for medical expenses or property damages because an uninsured or underinsured driver hits you.
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All insurance products have a max payout; uninsured and underinsured motorist coverage is no exception. Both insurance types are split-limit products in terms of coverage limits. This means that your max payout limits are per person and per accident.
A typical limit is $100,000 per person and $300,000 per accident, also expressed as 100/300 — as you would see in liability limits. Therefore, your best bet when deciding which limit to go with for UM is to select a split limit that reflects your bodily injury dollar value limits. For instance, if you have a limit of $400,000, then you want the same for your uninsured coverage limits.
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It’s important to note that most states allow you to use uninsured or underinsured motorist coverage if someone has hit your car or their car hits you while you’re walking. If your state permits using either of these insurance products, be aware there could be a deductible.
The states that don’t allow UMPD if you’re involved in a hit-and-run: California, Colorado, Georgia, Illinois, Louisiana, and Ohio. Although you can’t use this coverage to pay your expenses, you can utilize collision coverage instead.
You can stack uninsured underinsured motorist coverage in a small handful of states if you have multiple vehicles under one roof. So if you have two cars, you can double your limits, from 100/300 to 200/600.
For only a slight increase to your insurance premiums, these coverages are money well spent. Consider how much worse a car accident would be if the person that hit you wasn’t insured. To save you the headache of having to pay out-of-pocket for your own medical care or to repair the damage done to your property, UM and UIM are definitely worth considering for a small increase in your annual premiums.
Granted, if you live in a state where few people operate a vehicle without adequate insurance like New Jersey, it comes down to a personal choice — if it’s not a state requirement, of course.
The first thing you want to investigate is whether your state requires you to have either of these coverages — if so, then you have your answer. If not, you can compare the current ratio of uninsured drivers in your state to your finances and comfort level. For instance, if you couldn’t afford to pay bills associated with a car accident with a UM or UIM driver, you should have both options. As well, if you’ll drive more confidently knowing you, your passengers and your vehicle are protected, then you should also elect to have both coverage options.
If your state does not require it, then no. However, consider that UM also pays for pain and suffering and lost wages, so there are benefits to having this coverage, outside of just paying medical bills.
Jessica Fox Jessica Fox has been a freelance writer for five years, with a specialty in health, wellness, and insurance. During this time, she’s written for some of the biggest B2B and B2C brands from around the world. Jessica is also the mother of two young daughters and loves coffee, writing, and working out.
