If you’re in an accident and you aren’t at fault, generally the damages are the other driver’s responsibility.
But what happens when that person doesn’t have insurance? Even though it’s the law, many people still drive without insurance or without enough insurance to cover the damages. As much as 13% of drivers are uninsured.
Where does that leave you?
If you have uninsured/underinsured motorist insurance, you’ll likely have the coverage you need.
Here’s how it works.
What is Uninsured Motorist Insurance?
Uninsured motorist coverage is insurance that protects you even when you’re not at fault. Even though your insurance shouldn’t have to pick up the tab when you aren’t at fault if the other driver has no insurance, uninsured motorist will cover you.
Without uninsured motorist coverage, you’d have no insurance coverage and the financial liability of the damages to your car or yourself would be your responsibility.
What Does Uninsured Motorist Cover?
If you’re in an accident with an uninsured driver who is at fault, your uninsured motorist insurance should cover:
- Damages to your car
- Medical bills caused by the accident
- Lost wages due to the inability to work
- Compensation for pain and suffering
- Other related expenses, such as funeral expenses
Is Uninsured Motorist Required by Law?
Many states require uninsured motorist coverage. However, those that don’t require it must offer it. If you turn it down, it must be in writing so there is proof that it was offered to you. Some states even have state-specific forms you must complete to decline the coverage.
Where is Uninsured Motorist Coverage Required?
The regulations change often, but currently, here are the states that require uninsured motorist coverage:
- Connecticut
- Illinois
- Kansas
- Maine
- Maryland
- Massachusetts
- Minnesota
- Missouri
- Nebraska
- New Hampshire
- New York
- North Carolina
- North Dakota
- Oregon
- South Carolina
- South Dakota
- Vermont
- Virginia
- Washington DC
- West Virginia
- Wisconsin
How Much Does Uninsured Motorist Coverage Cost?
Like any add-ons to your insurance, your premiums will increase, but by how much depends on where you live, the car you drive, your driving history, and your credit history.
It makes sense to buy the same amount of uninsured motorist coverage as you have in liability coverage. You’re covering yourself should someone else who is at fault not have the proper insurance.
The coverage typically doesn’t add too much to your premiums and when you compare it to the ‘what ifs’ it makes a lot of sense to purchase it.
How to File a Claim for Uninsured Motorist Coverage
If you’re hit by a driver with no insurance, you simply file a claim with your insurance against your uninsured motorist coverage. Once the insurance company verifies the at fault driver didn’t have insurance, your uninsured motorist coverage will take over.
What is Underinsured Motorist Coverage?
If you’re in an accident that wasn’t your fault, but the at fault driver doesn’t have enough liability coverage to cover your damages, underinsured motorist coverage may help.
There are two types of underinsured motorist coverage policies:
- Bodily injury – If you have sufficient injuries from the accident and the at fault driver’s insurance isn’t enough to cover the medical bills, pain and suffering, lost wages, or funeral expenses, your underinsured coverage may kick in.
- Property damage – If your car has serious damages from the accident and the at fault driver’s insurance doesn’t cover the full amount of the damages, your underinsured motorist coverage may help.
What Does Underinsured Motorist Cover?
Every policy differs, but in general, underinsured motorist coverage handles the difference of what the at fault driver’s insurance doesn’t cover for:
- Damages to your car
- Medical bills for your injuries
- Pain and suffering compensation
- Loss of wages coverage
- Other related expenses, including funeral expenses
Is Underinsured Motorist Required by Law?
Some states, although not as many as uninsured motorist coverage, require underinsured motorist coverage. Even if it’s not required, it’s good coverage to consider. When you think of the savings it could offer should the worst happen, the slightly higher premiums won’t seem like a big deal.
Is Underinsured Motorist Coverage Worth It?
Underinsured motorist coverage seems like just another reason to pay higher insurance premiums, but it’s a good safeguard to have in place.
Even though it’s the law in most states to carry adequate liability insurance, not everyone follows the law. While they’ll face their own consequences if they cause an accident for not carrying enough insurance, you’ll feel the financial impact if your car or your body was hurt.
Paying for underinsured motorist coverage ensures that you’ll have financial protection should the other people on the road not take their responsibilities seriously.
How to File an Underinsured Motorist Claim
If you are hit by an underinsured motorist, the process gets a little trickier. The easiest way to handle it is to let your insurance company know of the accident and they’ll find out the details of what the other driver carried.
If you must use your underinsured motorist coverage, your insurance company will tell you how to proceed.
What is Stacking and How Does it Work?
If you have multiple cars insured with the same insurance company and they all have uninsured or underinsured motorist coverage, you can stack the coverage should you need it.
Here’s what that means.
Say you have 3 cars insured on the same policy. One car is in an accident and is hit by an uninsured driver. You have $20,000 underinsured motorist property damage coverage for each car. The damages to your car are $75,000 and the at fault driver only has $20,000 in coverage. You can stack the coverage from all three cars on your policy to make up the difference, but you use up the limits on the policies, except for a small amount left on the third policy.
X Ways to Lower your Car Insurance Premiums so you can Afford UM and UIM Insurance
If you’re wondering how you’ll afford to increase your premiums even further to protect yourself financially, here are X ways to lower your premiums.
1. Consider a Higher Deductible
If you have the minimum deductible right now, consider a higher one. Don’t choose a deductible you can’t afford but increasing it slightly can lower your premiums. For example, a $100 deductible sounds great. You’d only owe $100 if you got in an accident and it was your fault. But you’ll pay the higher premiums for the entire time you have the insurance, which will cost much more than the $100 deducible.
Instead, take the higher deductible, make sure you have at least that much saved and enjoy the lower premiums.
2. Insure all your Vehicles with the Same Insurer
If you have multiple drivers in the house or you own multiple cars, insure them with the same company to get the multi-policy discount. Insurance companies reward you for loyalty. The more cars each client has with them, the more money they make. They’ll typically reward you for multiple cars with a hefty discount.
3. Bundle your Insurance
If you own a home or have renter’s insurance, consider keeping all policies with the same insurance company. This too helps insurance companies make more money without using any marketing dollars. They’ll reward you for keeping your policies with them with a bundled discount.
4. Keep a Clean Driving Record
Follow the law and don’t drive recklessly so you aren’t involved in accidents that are your fault or get tickets. The worse your driving record is, the higher the risk you are which means higher premiums. Keep your driving record clean to get the lowest premiums.
5. Keep your Credit Score Up
Some insurance companies check your credit to determine your premiums (where it’s allowed by law). Studies show that people with lower credit scores are at a higher risk of causing accidents or driving recklessly, which is a higher risk for insurance companies.
6. Shop Around
Don’t forget the simple tactic of shopping around to get the cheapest premiums. Consider checking out rates annually to make sure you’re paying the lowest premiums possible for the best coverage. Sometimes staying with the same company results in higher premiums just because they don’t have to ‘lure you in’ to get your business. Shopping around and switching companies periodically may provide you with savings.
Key Takeaway
Even if your state doesn’t require it, uninsured and underinsured motorist coverage is a key part of any insurance policy. It protects you in the event that another driver isn’t as responsible and doesn’t carry the insurance needed to cover damages, they caused to you or your car.
