Uninsured / Underinsured Coverage

By Daisy Rogozinsky
March 30, 2022

If you were in a motor vehicle accident and the other party didn’t have insurance, it is still possible that you won’t have to pay for all of the damages out of pocket if you have uninsured and/or underinsured motorist coverage. In this article, we’ll explain both of these terms.

Key Takeaways

  • Uninsured motorist (UM) coverage and underinsured motorist (UIM) coverage are types of insurance used for situations in which the at-fault driver isn’t able to pay damages because they either do not have insurance or their insurance is insufficient for the cost of the damages
  • There are two types of UM and UIM coverage: property damage and bodily injury

What Is Uninsured/Underinsured Coverage?

Uninsured motorist (UM) coverage and underinsured motorist (UIM) coverage are special types of car insurance intended to be used in situations when a driver is in an accident with another driver who is not able to pay damages because:

  • They don’t have liability car insurance
  • They don’t have enough liability insurance to cover the damages
  • Their insurance company denies coverage or goes out of business

It is a type of add-on that you can get to your standard auto insurance policy, although some states require drivers to have it or at least for insurance companies to offer it. While it does usually cost more to add UM and UIM coverage to your insurance policy, it can protect you from having to pay out of pocket for a car accident you didn’t cause.

UM and UIM coverage can pay for expenses such as:

  • Medical bills
  • Lost wages
  • Pain and suffering
  • Funeral expense

Car repairs are only covered by UM and UIM in some states.

The Difference Between Uninsured and Underinsured Motorist Coverage

Uninsured motorist coverage protects you if the at-fault driver in your car accident doesn’t have any liability insurance.

In contrast, underinsured motorist coverage protects you if the at-fault driver in your accident does have liability coverage but their limits are too low to cover all of your damages. In these scenarios, the at-fault driver’s insurer will typically pay for all of the damages up to the policy limit, and then your underinsured motorist coverage will cover the rest up to your UIM policy’s limit. 

Note that each state has a slightly different definition of the term “underinsured,” and it’s important to familiarize yourself with your insurance company’s exact definitions and coverage. 

Types of Uninsured and Underinsured Motorist Coverage

Uninsured and underinsured motorist coverage break down into two types: bodily injury and property damage.

Uninsured/Underinsured Motorist Bodily Injury Coverage (UMBI/UIMBI)

Uninsured and underinsured motorist bodily injury coverage is meant to cover you and/or the other people in your car for expenses related to physical injury. These include medical bills, lost wages, pain, and suffering. Note that having personal injury protection (PIP) does not always mean that you don’t need UMBI or UIMBI, as they tend to offer higher limits.

Uninsured/Underinsured Motorist Property Damage Coverage (UMPD/UIMPD)

Uninsured and underinsured motorist property damage coverage is used to pay damages related to needing to replace or repair your property. This includes things like car repairs, rental car costs, and other out-of-pocket expenses.

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