Do You Need Uninsured Motorist Coverage?

For most drivers, yes. Uninsured and underinsured motorist coverage, usually written as UM/UIM, is the only part of a standard auto policy that pays you when the driver who caused the crash has no insurance, not enough insurance, or drove off before anyone got a plate number. Liability coverage pays other people when you are at fault. UM/UIM does the reverse: it protects you when someone else is at fault and cannot cover what they owe you.

What uninsured motorist coverage actually does

The National Association of Insurance Commissioners describes uninsured motorists coverage as protecting the policyholder directly, and says it pays if you are injured by a hit-and-run driver or a driver who does not have auto insurance. The Texas Department of Insurance describes the same coverage as paying your medical expenses and vehicle repair bills that the at-fault driver cannot pay.

That last phrase is the important one. Without this coverage, an at-fault driver who carries nothing leaves you holding your own medical bills and your own repair estimate, and your only route to recovery is suing a person who, by definition, had no money for insurance in the first place.

Uninsured and underinsured are two different problems

The two halves of UM/UIM solve related but separate situations, and it is worth knowing which one you are relying on.

• Uninsured motorist: the at-fault driver carried no liability insurance at all.
• Hit-and-run: the driver left the scene and was never identified. Washington's insurance regulator notes that this coverage may help pay for damage and injury from a hit-and-run accident or a phantom vehicle.
• Underinsured motorist: the driver had insurance, but their limits ran out before your bills did. This is the more common scenario, because state minimum liability limits are small relative to what a serious injury actually costs.
• Out-of-state crashes: some states build this into the coverage. New York's supplementary uninsured/underinsured motorists coverage, known as SUM, provides coverage for accidents occurring out of state.

You may already have it without realizing

Many states do not leave this coverage purely optional. Instead they require insurers to put it in front of you and make you refuse it deliberately. In Texas, the Department of Insurance states that insurance companies must offer you this coverage, and that if you do not want it you must tell the company in writing. New York treats uninsured motorists coverage as one of its required coverages, and requires insurers to include SUM coverage equal to your bodily injury liability limits unless you decline the coverage in its entirety or select a lower amount.

The practical implication is that a written rejection you signed years ago may still be shaping your policy today. Pull your declarations page and look for a UM or UIM line. If it is missing, it was almost certainly declined at some point rather than never offered. Rules on how the coverage is offered, priced, and stacked vary by state, so confirm the specifics with your own state's insurance department.

How it differs from collision and PIP

People often assume other coverages already handle this, and they partly do. Washington's insurance regulator points out that without uninsured motorist coverage, collision coverage may still pay for your damaged car and personal injury protection may still cover injuries related to the accident. The gap is in what those coverages do not reach: collision pays for the vehicle, not for your injuries beyond a medical coverage limit, and both leave you paying deductibles on a crash that was not your fault.

There is also a deductible question specific to this coverage. The Texas Department of Insurance notes that in Texas, you must meet a deductible for UM/UIM claims, the same as with collision and comprehensive. Whether and how a deductible applies is a state-level detail, so check your own policy rather than assuming.

When it is worth carrying

The case for keeping UM/UIM is strongest in the same situations where the downside of not having it is worst.

• You have significant income or assets to protect and would feel a long gap in earnings after a serious injury.
• Your health insurance carries a high deductible, so injury bills would land on you first.
• You drive in an area where uninsured driving is common, which your state insurance department or DMV can often tell you.
• You carry high liability limits. There is an argument that protection for your own family should not be far below the protection you bought for strangers.
• You commute heavily or carry passengers regularly, which raises the number of people whose injuries could run past a minimum-limits policy.

How to check and adjust it

Start with your declarations page and find the UM and UIM limits, if any. Compare them to your bodily injury liability limits. If the UM number is far lower, ask your insurer what it would cost to raise it. Because this coverage only pays in the narrow set of situations described above, the price to increase it is often modest relative to the coverage it adds, though what you pay depends on your state, your insurer, and your own rating factors. When you compare quotes, the NAIC's advice applies here as much as anywhere: give the same information to each agent or company, including the coverages and limits you want, so the numbers you get back are actually comparable.

The bottom line

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