Uninsured Motorist Coverage

When you’re driving, road accidents can happen in a flash, however, what if the accident is not caused by any fault of your own? Unlike other auto insurance policies that tend to focus on accidents caused by the policy owner, uninsured motorist insurance deals with accidents that are not your fault, but the fault of the other party. It also protects against irresponsible drivers, such as a hit-and-run.

Uninsured motorist insurance protects you against paying out of pocket for extra damages you cannot afford. Overall, there are four components of uninsured motorist insurance that we’ll go over and that are essential to each insurance policy. The four factors are: uninsured motorist insurance, underinsured motorist insurance, property damage, and bodily injury. All four pertain to uninsured motorist insurance and are important when purchasing this form of insurance.

Depending on the state, all or some of the four components of uninsured motorist insurance will be required. We’ll also go into the details for each state below. If your state does not require you to purchase one or all the uninsured motorist insurance, then you may be able to add it to your pre-existing care insurance policy. This will depend on your state and the insurance company you are currently with.

How Does an Uninsured Motorist Coverage Claim Work?

Normally the way car insurance works is that if an accident occurs and you are not the at-fault driver, then your claim can be filed easily with the insurance company of the other party involved in the accident.

The insurance company then provides compensation for your car and medical expenses, depending on the severity of the injury.

Every state, except for New Hampshire, requires that each driver must have auto liability insurance, which keeps you protected from at-fault drivers. However, if the accident you are in occurs with an at-fault driver who is uninsured or underinsured, without underinsured motorist insurance you would have to pay out of pocket.

In the same scenario, where the at-fault driver’s auto liability coverage cannot pay for all the damages, or if they are uninsured, but you have uninsured motorists’ insurance then your insurance will pay for the extra expenses. This saves you from an excess liability fee.

What Does Uninsured Motorists Insurance Cover?

Uninsured motorists Insurance is usually split into two categories, the first being uninsured property damage and the second uninsured bodily damage. In some states, where uninsured motorist insurance is not mandatory, the requirements for car insurance will require either both or just one of the two. You may also have the option to add uninsured motorist insurance to your regular car insurance, although this is policy-dependent. Below we’ll explain the two forms of uninsured motorists’ insurances and what they cover.

Uninsured Motorist Property Damage (UMPD): If an accident occurs and the property damage, to the car and the surrounding area, is greater than the minimum liability of the driver who caused the incident, then your uninsured motorist insurance policy will cover the damage of the car, the repair, rental car fee and damage to surrounding areas involved in an accident.

Uninsured Motorist Bodily Damage (UMBD): If you’re in an accident and the physical damage to your body and your passenger’s body is greater than the minimum liability of the driver who caused the accident, then your motorist insurance will cover all the damages. This coverage includes medical bills needed for recovery after the accident, funeral expenses or any lost salary pay (if you miss workdays because of the accident).   

Underinsured Motorist Property Damage: If an accident occurs and the at-fault driver does not have auto liability insurance, then your insurance will cover damage of the car, the repair, rental car fee and damage to surrounding areas involved in the accident.

Underinsured Motorist Bodily Damage: If an accident occurs and the at-fault driver does not have auto liability insurance, then your insurance will cover medical bills needed for recovery after the accident, funeral expenses or any lost salary pay (if you miss workdays because of the accident). If there is a passenger with you, their medical bills will also be covered.

Making sure you’re covered for both property damage and bodily damage will ensure that you pay no out-of-pocket fees if an accident with an at-fault driver occurs.

What Is the Difference Between Underinsured and Uninsured Motorist Insurance?  

The difference between uninsured and underinsured motorist insurance is the following:

• Uninsured occurs when an at-fault driver, the one who caused the accident, is uninsured and had no auto liability insurance

• Underinsured is when the at-fault driver, the one who caused the accident, does have auto liability insurance, but the accident is over their auto liability insurance. In other words, their insurance does not cover the full cost of damages.

In both cases, if you have full uninsured motorist insurance then the insurance company will pay all the fees, so you don’t have to pay out-of-pocket. To understand the full scope of uninsured motorist insurance, let’s talk about auto liability insurance.

Uninsured Motorist Insurance in Different States 

According to the official OLR Research Report, by Connecticut General Assembly, the following states require uninsured motorist bodily injury coverage:

And the following states require full underinsured motorist coverage:

All states, except for New Hampshire, require auto liability insurance, and of those states, 21 require uninsured motorist bodily injury coverage and 14 require underinsured motorist coverage. Individuals in New Hampshire, where auto liability insurance is not a requirement, must provide proof that they can afford to pay both property and bodily injury damages should they be in a car accident. So, although it is not a requirement to purchase auto liability insurance it is still mandatory to have sufficient funds to pay for accident fees. 

What is Auto Liability insurance? 

Auto liability insurance works hand in hand with uninsured motorist insurance. If a car accident occurs, the first step your insurance will take afterward is to figure out who was at fault. Both drivers, whether or not they are at fault, will usually have auto liability insurance (unless they are in New Hampshire, wherein in this case the at-fault driver will have sufficient funds to pay the other party).

Auto liability insurance is purchased for a situation where you are the at-fault driver. In this case, if you are the at-fault driver and you have auto-liability insurance then your insurance will cover the fees of the other individuals involved in the accident. To put it simply, one can think of auto liability insurance as the opposite of uninsured motorist insurance; one is for the scenario where you are the at-fault driver and the other is when you are not the at-fault driver.

Just like uninsured motorist insurance, auto liability insurance is divided into two components.

Auto Liability Property Damage: The property damage portion of auto liability insurance covers damages to the car and the surrounding affected areas for example if barriers, signs, affected greenery in the surrounding areas of the accident, and rental vehicle for the other individual.

Auto Liability Insurance Bodily Injury: This is once again similar to uninsured motorist insurance and covers the other individual’s medical bills, prescriptions, and loss of income (because of injuries sustained that enable them from working).

Each person’s coverage for auto liability insurance will differ. It is based on lifestyle factors such as, but not limited to, marital status, age, car & home ownership, vehicle details and can range as low as $25,000 or up to $300,000. 

Rates for Uninsured Motorist Insurance

There are two different ways the uninsured motorist insurance rates are processed and it’s divided, once again, into uninsured motorist property damage and bodily injury. For property damage, the value will be the same as your car’s value. For bodily injury, most states require that you have the same rate for bodily injury as your auto liability coverage. However, other states may give you an option. Either way, the rates are usually matched. 

The prices are broken down into a 100/300 model where $100,000 per person is covered and $300,000 max per accident. Each state has a distinct set of minimum uninsured motorist coverages.

Please note that both auto liability and uninsured motorist insurance do not cover collisions. There is separate insurance for collision, called collision coverage, which is for accidents where the at-fault driver hits a stationary object, which could include a parked car, a tree or a sign.

Health Insurance Versus Bodily Injury Coverage

If you have good health care insurance, then you might question the need to purchase bodily injury coverage. In states where UMBI is not mandatory your health care may already cover some of the damages sustained during an accident. This will differ from state to state, as each health insurance policy and uninsured motorist policy has various coverages. Purchasing a UMBI will depend on the efficacy of your health insurance.

What most people forget is that while health insurance protects only you, uninsured motorists’ insurance protects both you and the passengers in your car that were affected during the accident.

While each individual is different, you should keep in mind that once you purchase and make payments for uninsured motorist insurance, it becomes an investment for the future. Some healthcare insurances may not be permanent or be lost in the future. Taking these into account will help in your overall decision concerning healthcare versus bodily injury coverage from uninsured motorist insurance.

There are some factors in the UMBI which many health insurance policies do not cover, such as compensation for missed wages, pain and suffering and funeral expenses. You’ll want to check with your health insurance policy to see what they cover and do not cover concerning accident fees.

The Take-Away

We've broken down Underinsured Motorist insurance into four key components, the important takeaway of the insurance is as follows: 

Uninsured Motorist Property Damage: covering car and surrounding damage

Uninsured Motorist Bodily Damage: medical fees, lost wages, pain, and suffering

Underinsured Motorist Property Damage: same as above, but for underinsured drivers

Underinsured Motorist Bodily Damage: same as above, but for underinsured drivers

Remember that uninsured motorist insurance differs from collision insurance and health care insurance. It keeps you protected against at-fault drivers and drivers who leave the scene after an accident occurs.

Uninsured/underinsured motorist insurance is a form of car insurance that gives you peace of mind during a situation where you are not the at-fault driver.

Although Auto Liability Insurance is mandatory in 49 states, there is always the possibility of accidents occurring with an uninsured driver. If it’s not an uninsured driver, then it might be an underinsured driver, whose auto liability coverage is below the accident fees. Minimum auto liability coverages are different depending on the state, some have higher minimum coverages while others have lower.

You won’t know a driver’s minimum auto liability fees until an accident occurs, to protect you against that uninsured motorist insurance stops you from paying out-of-pocket for expenses.

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