The legal requirement to carry auto insurance doesn't mean everyone does. According to the Insurance Research Council, roughly 14% of all drivers — about 1 in 7 — are uninsured at any given time. In states like Florida, Michigan, and Mississippi, that number exceeds 20%. On top of that, millions more carry only minimum required coverage — barely enough to cover a fender-bender, let alone serious injuries.
Uninsured and underinsured motorist coverage (UM/UIM) is your financial protection when the person who hit you can't pay for the damage they caused.
How Uninsured Motorist Coverage Works
Standard auto insurance is designed around fault: the driver who causes an accident is responsible for the other driver's injuries and property damage. Their liability insurance pays the bills. But that system only works when the at-fault driver has adequate insurance.
When they don't, your UM coverage steps in and pays what their insurance would have paid — up to your UM limit.
Uninsured Motorist Bodily Injury (UMBI): Pays for medical expenses, lost wages, and pain and suffering for you and your passengers when injured by an uninsured driver.
Uninsured Motorist Property Damage (UMPD): Pays to repair or replace your vehicle when damaged by an uninsured driver. Not available in all states; some states exclude it or make it optional.
How Underinsured Motorist Coverage Works
Underinsured motorist coverage (UIM) addresses a different problem: the at-fault driver has insurance, but their limits are too low.
Example scenario:
- At-fault driver has $25,000 in bodily injury liability (state minimum in many states)
- You sustain a herniated disc requiring surgery — total medical costs: $85,000
- Lost wages from 3 months out of work: $18,000
- Total damages: $103,000
- Their liability pays: $25,000
- Your UIM coverage pays: up to $78,000 more (depending on your UIM limit)
Without UIM coverage, you'd owe the $78,000 difference out of pocket — or spend years pursuing a judgment against someone who likely doesn't have the assets to satisfy it.
Hit-and-Run Accidents
Hit-and-run accidents — where the at-fault driver flees and cannot be identified — are treated like uninsured motorist accidents under most policies. Your UM coverage pays for your injuries and property damage even when the responsible driver is never found.
There may be reporting requirements: you typically need to report a hit-and-run to the police within a reasonable time frame and cooperate with the investigation. Check your policy for specific requirements.
States Where UM/UIM Is Required
Many states require UM/UIM coverage, and some require both. Required or not, the coverage is strongly recommended:
- States requiring UM/UIM: Connecticut, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Vermont, West Virginia, Wisconsin, and Washington D.C.
- States where it's optional: You can typically add it to any policy — and should.
Even in states where UM/UIM is optional, the uninsured driver rate often makes it essential. Florida has mandatory PIP but not UM/UIM — yet has one of the highest uninsured driver rates in the country.
How UM/UIM Interacts with Health Insurance
Many drivers skip UM/UIM thinking their health insurance covers accident injuries. Here's why that reasoning is flawed:
- No wage coverage: Health insurance doesn't pay lost wages if you're out of work for weeks or months after an accident. UM/UIM typically does.
- No property damage: Health insurance doesn't fix your car. UMPD coverage does.
- Deductibles and copays: Your health plan may have a $5,000 deductible. UM/UIM often has no deductible (or a small one) for medical expenses.
- Network limitations: Emergency treatment from out-of-network providers after an accident may generate large bills your health insurer won't fully cover.
- Coordination of benefits: Some health plans require you to exhaust your auto coverage first — meaning UM/UIM needs to exist before health insurance will step in on an auto accident claim.
- Pain and suffering: Health insurance doesn't compensate for pain, suffering, or quality of life impacts. UM/UIM bodily injury coverage includes compensation for these non-economic damages.
Stacking vs. Non-Stacking UM/UIM
In states that allow it, "stacking" UM/UIM means your coverage multiples across multiple vehicles on your policy. If you have two cars each with $100,000 in UM coverage and stacking is available, your effective UM limit may be $200,000 after an accident.
Non-stacking limits you to the UM limit on the specific vehicle involved in the accident. Stacking increases your premium moderately but provides significantly more protection. Not all states allow stacking; check with your carrier or agent.
What UM/UIM Limits Should You Carry?
The universal recommendation from insurance professionals: match your UM/UIM limits to your liability limits.
The reasoning is straightforward. When you chose your liability limits, you decided how much coverage you needed to protect someone else from serious injuries you might cause. You deserve the same protection when someone does that to you.
If you carry 250/500/100 in liability, carry 250/500 in UM/UIM.
Cost to increase UM/UIM from 50/100 to 250/500: typically $30–$80/year. A modest premium for protection against the financial gap that emerges when the driver who hit you has minimum coverage or none at all.
How UM/UIM Claims Work
Filing a UM/UIM claim follows a similar process to a standard claim:
- Report the accident to your insurer promptly
- Document injuries, treatment, and expenses
- Provide police report (required for hit-and-run; helpful for all UM claims)
- Your insurer investigates and adjusts the claim
- For UMBI, your insurer pays your medical bills, lost wages, and damages up to your limit
- For UIM, you typically must first pursue the at-fault driver's liability insurance, then claim the remainder from your UIM coverage
One important note: some states require you to get your insurer's consent before settling with the at-fault driver's insurer on a UIM claim. Settling with the at-fault insurer without notifying your carrier can waive your UIM rights.
Bottom line: With 1 in 7 drivers uninsured — and millions more dangerously underinsured — UM/UIM coverage isn't optional protection. It's essential. The cost to add or increase UM/UIM limits is modest; the protection it provides is substantial. Match your UM/UIM limits to your liability limits and make sure hit-and-run accidents are covered. Compare quotes from 50+ carriers through our licensed insurance partner to review your full auto coverage structure.