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Why Buy Uninsured Motorist Coverage?

Jason Metz

Uninsured motorist (UM) coverage and underinsured motorist (UIM) coverage cover injuries to you, residents of your household and your passengers if you're in a car accident caused by either: 1) a driver who does not have any liability car insurance or 2) a driver who does not have enough liability insurance to pay for your medical bills.

UM coverage is something to consider buying, especially since one in eight drivers nationwide has no insurance, according to the Insurance Research Council. In some states the numbers of uninsured drivers are much higher -- as high as 26.7% in Florida.

What do uninsured motorist insurance and underinsured motorist insurance cover?

  • Medical bills.
  • Pain and suffering.
  • Lost wages if you're unable to work due to the accident.
  • Funeral and burial expenses.

Important things to know about UM coverage

  • Some states require car owners to have UM/UIM coverage.
  • If you have more than one car and want UM coverage, you might be required to have UM coverage on all your cars.
  • Depending upon your state laws, UM can also cover hit-and-run accidents.

UM coverage for property damage

There's also a type of UM for property damage called uninsured motorist property damage, or UMPD. If you have UMPD, it can pay for damage to your car if a driver who doesn't have enough insurance hits you. UMPD is not available in all states.

You might have a deductible if you make a UMPD claim. A deductible is the amount subtracted from your insurance check, such as $250, $500 or $1,000.

Uninsured motorist claim payments: Might not be what you expected

Depending on your state, your maximum UM claim payment can be reduced by the amount of the at-fault driver's liability insurance. Here's where things can get tricky in understanding what you're buying with UM.

Say you have $100,000 per person in UM bodily injury coverage and someone crashes into your car, injuring you. Let's say that driver only has $25,000 in bodily injury liability insurance per person. Your UM coverage would pay out a maximum of $75,000 ($100,000 - $25,000), not $100,000.

This can vary by state. For example, Connecticut has "uninsured motorist conversion coverage," which makes your full UM limit available to you matter how much liability insurance the at-fault driver has.

In Georgia, you can choose whether you want your UM claim limit reduced by the amount of the at-fault driver's liability insurance. The choices in Georgia are:

  1. Uninsured Motorist Coverage – Added On to At-Fault Liability Limits.
  2. Uninsured Motorist Coverage Reduced by At-Fault Liability Limits.

Do you really need uninsured motorist coverage?

You might have to buy uninsured motorist coverage. UM is required in 20 states and in the District of Columbia. In some states, auto insurance companies are required to offer UM coverage but you can reject it in writing or by signing a state-approved form.

Even if your state does not require UM, it's something to consider buying when you're comparing auto insurance quotes.

Use the map below to see if your state requires UM coverage.

How much uninsured motorist coverage do you need?

The national average claim payment for UM is $28,588, according to the National Association of Insurance Commissioners' (NAIC) most recent report, based on 2014 data. In some states, the minimum required UM amount would not cover the national average claim. You may want to consider buying higher UM limits than the state minimum.

You may be required to "match" your UM limits to your liability limits. For example, if you have 100/300 ($100,000 per person, $300,000 per accident) in bodily injury liability, you may have to buy 100/300 in UM to match it.

Why do I need uninsured motorist coverage if I have health insurance?

If you don't have UM coverage and are hit by someone else, your health insurance will typically pay medical bills. However, a health insurance plan will not pay for pain and suffering, lost wages or funeral benefits, which are typically covered by UM. You might also consider buying UM coverage if:

  • Your health plan has a high deductible.
  • Your health plan has high coinsurance.

Is UMPD coverage worth it?

The national average for a UMPD claim payment was $1,677.81, according to the NAIC's most recent report, based on 2014 data. UMPD is not required in all states and what it covers differs by state. For example, not all states will allow UMPD to cover hit-and-run accidents.

If you already have collision insurance you might not need UMPD. Collision coverage typically pays for damage to your vehicle no matter who caused the accident. However, UMPD is cheaper and usually has a lower deductible.

Does full coverage include uninsured motorist?

The meaning of full coverage car insurance can vary, but generally refers to a policy with liability, collision and comprehensive insurance.

What is stacked insurance?

Stacking insurance is when you make a claim from more than one UM policy. Not all states allow stacking. See more about Stacked insurance: How to maximize an uninsured motorist claim.

Can you go to jail for not having car insurance?

Yes, driving uninsured could result in fines, suspension of your driver's license and jail time. The penalties depend on your state.