Uninsured vs. Underinsured Motorist Coverage: What Drivers Need to Know
Many drivers believe their standard auto insurance policy will fully protect them after a crash—only to discover costly gaps in coverage when it matters most. One of the biggest areas of confusion involves the difference between uninsured motorist coverage and underinsured motorist coverage.
If you’re hit by a driver without insurance, uninsured motorist coverage can step in to protect you. If you’re hit by someone whose policy limits aren’t high enough to cover your losses, underinsured motorist coverage can fill the gap.
Unfortunately, many people either don’t carry these coverages or misunderstand how they work, leaving them vulnerable to significant out-of-pocket expenses and complicated legal battles after an accident.
What Is Uninsured Motorist Coverage?
Uninsured motorist (UM) coverage protects you if you’re injured in an accident caused by a driver who has no insurance at all. It can help pay for:
- Medical expenses
- Lost wages
- Pain and suffering
- In some cases, property damage
Without this coverage, you might have to pay these costs yourself or pursue a lawsuit against the at-fault driver—a process that can be lengthy and may yield little if the driver has no assets.
What Is Underinsured Motorist Coverage?
Underinsured motorist (UIM) coverage applies when the at-fault driver has insurance, but not enough to cover the full cost of your injuries and losses. For example, if your damages total $75,000 but the other driver’s liability coverage only pays $25,000, your UIM coverage can step in to cover the remaining $50,000 (up to your policy limit).
This coverage prevents you from having to pay the difference out of pocket and is especially important in states where minimum insurance requirements are relatively low.
Why You Should Have Both
UM and UIM coverage work together to protect you in more situations:
- UM: Covers you when the other driver has no insurance.
- UIM: Covers you when the other driver’s coverage isn’t enough.
Accidents involving uninsured or underinsured drivers are more common than many realize. Without these protections, you may face significant medical bills, lost income, and other expenses—with little to no help from the at-fault driver’s insurance.
Having both types of coverage can save you from having to file a personal injury lawsuit just to recover your losses. Even if you do file, collecting from an uninsured or underinsured driver can be challenging if they have limited assets.
Are They Required by Law?
Requirements vary by state:
- Uninsured Motorist Coverage: Many states require drivers to carry some form of UM coverage as part of their minimum insurance package.
- Underinsured Motorist Coverage: Fewer states mandate UIM coverage, but some require insurers to offer it as an option you can accept or reject in writing.
Even if it’s not required, both coverages are worth having for peace of mind and financial security.
The Bottom Line
Being hit by an uninsured or underinsured driver can leave you with devastating financial losses if you’re not adequately protected.
On top of that, the personal injury claim process can be time-consuming, stressful, and sometimes uncertain, especially if the other driver has limited assets or is unwilling to cooperate.
While adding UM and UIM coverage to your policy may slightly increase your premium, it’s a small price to pay compared to the cost of medical bills, lost wages, and legal fees after a serious accident.
Think of these coverages as a safety net—one you’ll be grateful for if the unexpected happens. Taking the time to review and update your policy now can spare you from stress, delays, and financial hardship later.
