Uninsured and underinsured motorist insurance coverage definition & basics

Although liability insurance is required by law in most states, many drivers do not carry car insurance. Moreover, many drivers carry only the minimum liability coverage, meaning their coverage isn't sufficient to pay for damages they might cause in an accident. For this reason, car insurance companies created uninsured and underinsured motorist coverage. Uninsured motorist coverage covers you if you're in a not-at-fault accident with a driver who does not have insurance — this includes hit-and-run scenarios. Underinsured motorist coverage kicks in when the at-fault driver does have insurance, but the damages exceed the liability limit of their policy.

These coverage options can be broken down into two parts: uninsured/underinsured motorist property damage and underinsured/uninsured motorist bodily injury.

What is uninsured property damage insurance coverage?

Sometimes shortened to UIM PD, uninsured property damage coverage is similar to collision coverage: it protects your vehicle from physical damage in a car accident. While it usually comes with a deductible, your insurer might reimburse you for it and send an invoice to the at-fault party. A key difference between uninsured property damage coverage and collision coverage relates to the way using them may impact your premium. While it can vary by insurance company, collision claims are typically seen as at-fault accidents to an insurance company. Meaning, they can cause your premium to rise. But by definition, uninsured/underinsured motorist property damage coverage is the result of a not-at-fault accident. Again, this isn't consistent across all car insurance companies so you should expect some discrepancies.

What is uninsured bodily injury insurance coverage?

This coverage kicks in if you sustain bodily injury or harm when hit by an underinsured or uninsured driver. This can include medical bills and other associated fees. Unlike property damage coverage, this insurance does not have a deductible.

Stacked vs. Unstacked Coverage?

Stacked insurance increased your uninsured motorist coverage based on the number of cars you insure. For example, you have 3 vehicles that are insured with $10,000 worth of uninsured bodily injury coverage (UMBI). If you're struck by an uninsured driver with stacked coverage, you could apply all 3 vehicle's worth of $10,000 in UMBI coverage to give you $30,000 of total coverage.

You should expect an additional increase in your premium if you decide to stack your coverage. Also, this coverage is not available in every state.

Do you need uninsured motorist insurance coverage?

Some states require you to carry uninsured motorist coverage. If uninsured and underinsured motorist coverage isn't required in your state, you might consider this policy anyway, for the following reasons:

• Your state has a large number of uninsured drivers (see below).

• Your state's minimum liability coverage is unusually low and you have a valuable vehicle. If we think back to our definition of underinsured, this coverage can protect you from being empty-handed with your coverage.

• You want protection against a hit-and-run driver, or being hit by a car as a pedestrian (both of these are also covered by uninsured/underinsured motorist coverage).

Frequently asked questions: