Uninsured and underinsured motorist coverage pays for your injuries and vehicle damage when the other driver cannot or will not pay

Uninsured motorist (UM) coverage covers you if you are hit by a driver with no insurance at all. Underinsured motorist (UIM) coverage covers you when the other driver's insurance limits are too low to pay for your actual losses. Both are optional add-ons to your auto policy in most states, though a handful require them. They protect you from the gap between what you owe in medical bills, lost wages, and vehicle repair and what the other driver's insurance will actually pay.

Without these coverages, you would have to sue the uninsured driver directly to recover money — a process that often fails because uninsured drivers typically have no assets to collect from. UM and UIM coverage lets your own insurer handle the claim instead, which is faster and more likely to result in payment.

Key Takeaways

  • Uninsured motorist coverage pays your medical bills and vehicle damage when hit by a driver with no insurance; underinsured motorist coverage pays the difference when the other driver's insurance limits are too low.
  • Both are optional in most states but required in a few, and they cover you, your passengers, and sometimes family members living in your household.
  • Your UM/UIM limits should match or exceed your liability limits to avoid leaving yourself short if you cause an accident and face a lawsuit.
  • These coverages do not cover damage to the other driver's vehicle or their medical bills — that is what your liability coverage does.
  • You can choose different limits for bodily injury and property damage, and stacking (combining limits across vehicles) is available in some states.

How uninsured motorist coverage works in a real accident

Say you are hit by another car at a red light. The other driver has no insurance. Your medical bills come to $8,000, and your car needs $5,000 in repairs. Your uninsured motorist bodily injury limit is $25,000 per person and $50,000 per accident. You file a claim with your own insurer, not the other driver's insurer (because they do not have one). Your insurer pays your $8,000 in medical bills from your UM coverage, up to your $25,000 limit. Your uninsured motorist property damage coverage pays the $5,000 repair bill, up to whatever limit you chose for that part.

Your insurer may then try to recover that money from the uninsured driver through subrogation — suing them or placing a lien on any future settlement they receive. But that is your insurer's problem, not yours. You are made whole without waiting for a lawsuit to finish.

If the uninsured driver caused the accident, you should not have to pay your deductible. Most policies waive it for UM claims. Check your own policy to confirm, because some insurers do explore it.

The difference between underinsured motorist coverage and uninsured motorist coverage

Underinsured motorist coverage kicks in when the other driver does have insurance, but their limits are too low. Say you are hit by a driver whose liability limit is $15,000 per person. Your medical bills and lost wages total $40,000. The other driver's insurer pays their full $15,000 limit. Your underinsured motorist coverage then pays the remaining $25,000, up to your UIM limit.

The key difference: with UM, the other driver has zero insurance. With UIM, they have insurance, but it does not cover your full loss. UIM only pays the gap between what their insurer paid and what your actual damages are.

Some states combine UM and UIM into a single coverage limit, meaning you have one pool of money to draw from whether the other driver is uninsured or underinsured. Other states keep them separate, so you have a UM limit and a different UIM limit. Check your policy declarations page to see which your state uses.

Who is covered under your UM and UIM policy

Your UM and UIM coverage protects you, the driver listed on the policy, and your passengers. It also covers family members who live in your household and are injured while riding in your car or any car they are driving (with permission). If your teenage child is hit by an uninsured driver while driving their own car, your household UM/UIM coverage may cover them, depending on your state and policy wording.

Coverage does not extend to people who are injured while committing a crime, or to the uninsured driver themselves. If the uninsured driver is a household member, coverage may be limited or excluded — check your policy or ask your agent.

Passengers in your car are covered up to your per-person limit. If three passengers are injured in the same accident, each can recover up to the per-person limit, but the total cannot exceed your per-accident limit.

Choosing limits: how much UM and UIM coverage you actually need

UM and UIM limits come in pairs: a per-person limit and a per-accident limit. A common example is 25/50, meaning $25,000 per person and $50,000 per accident. Another is 100/300, meaning $100,000 per person and $300,000 per accident. The higher the numbers, the higher your premium.

A good rule is to match your UM/UIM limits to your liability limits. If you carry 100/300 liability (meaning you can pay up to $100,000 per person if you cause an accident), you should carry 100/300 UM/UIM as well. This protects you equally whether you cause the accident or someone else does. If your UM/UIM limits are lower than your liability limits, you are underprotected.

Consider your assets and income. If you own a home or have significant savings, higher limits make sense because a serious accident could wipe you out. If you have minimal assets, lower limits may be acceptable, though most insurance agents recommend at least 50/100.

Medical bills from a serious injury can easily exceed $25,000. A single hospitalization, surgery, and physical therapy often costs $50,000 or more. If you are injured and your UM limit is only $25,000, you will have to pay the rest yourself or sue the uninsured driver personally.

Stacking and how it affects your coverage limits

Stacking means combining your UM/UIM limits across multiple vehicles on the same policy. If you own two cars, each with a 25/50 UM limit, stacking would let you combine them into a 50/100 limit for a single accident. This is useful if you have multiple vehicles and want more protection without paying for higher limits on each car.

Not all states allow stacking, and not all insurers offer it. Some states require it by law; others make it optional. A few states prohibit it entirely. Your agent can tell you whether stacking is available where you live and whether it makes sense for your situation.

Stacking increases your premium because your insurer is taking on more risk. But if you own multiple vehicles, it is often cheaper than raising the limits on each car individually.

What UM and UIM coverage does not cover

UM and UIM coverage is for your own injuries and damage to your vehicle. It does not pay for damage to the other driver's car or their medical bills — that is what your liability coverage does. If you cause an accident, your liability coverage pays the other driver's bills and repairs. UM and UIM only protect you when someone else causes the accident.

UM and UIM do not cover damage from collisions with animals, potholes, or weather. Those are covered under collision or comprehensive coverage, which are separate add-ons. UM and UIM also do not cover punitive damages (extra money meant to punish the other driver) in most states, though a few allow it.

If you are hit by a hit-and-run driver, UM coverage usually applies, but you may need to file a police report and meet other requirements. Some policies require you to prove you made a reasonable effort to identify the hit-and-run driver. Check your policy or ask your agent about hit-and-run rules in your state.

Frequently Asked Questions

Do I have to carry uninsured motorist coverage?

Most states make it optional, but you can decline it in writing. A handful of states require it by law. Check your state's insurance department website or ask your agent. Even where it is optional, most agents recommend carrying it because uninsured drivers are common — roughly one in eight drivers nationwide has no insurance.

Will my rates go up if I file a UM claim?

No. Because you did not cause the accident, filing a UM claim should not increase your premium. Your insurer may not raise your rates, and some states prohibit them from doing so. However, if you file multiple claims in a short time, your insurer may review your overall risk and adjust your rates for other reasons.

What happens if the other driver is found to be partially at fault?

In most states, you can still collect UM or UIM benefits even if you are partially at fault. Your state's comparative negligence or comparative fault rules determine how much you recover. If you are found 20 percent at fault and your damages are $10,000, you might recover $8,000 (80 percent). Some states have different rules, so check with your insurer or a local attorney.

Can I stack UM coverage across household members?

Stacking rules vary by state and insurer. Some allow you to stack limits across vehicles; others allow stacking across household members; some allow both. A few prohibit stacking entirely. Your policy documents or agent can clarify what is available in your state.

What if my UM limit is lower than my actual damages?

Your UM coverage pays up to your limit, and you are responsible for the rest. You can then sue the uninsured driver personally to recover the difference, though collecting from an uninsured driver is often difficult. This is why choosing adequate limits upfront is important.