Protecting Yourself against Uninsured Motorists
About one out of every eight U.S. drivers does not have an auto insurance policy, even though it is mandatory to purchase this coverage in 49 out of 50 states (New Hampshire is the exception), according to the Insurance Research Council (IRC). In several states, more than one in five drivers do not carry coverage.
If you’re involved in a serious accident with an uninsured motorist, you could be at risk for substantial financial losses.
For protection from losses arising from an accident with an uninsured motorist, consider purchasing uninsured motorist coverage. A handful of states require that this coverage be included in all auto insurance policies. Regardless of state requirements, you may already carry uninsured motorist coverage, so check your policy or ask your insurance professional.
Types of Uninsured Motorist Coverage
Specific options for uninsured motorist coverage vary by state and insurer, but in general there are three types of protection:
Uninsured Motorist (UM) Insurance—Also known as Uninsured Motorist Bodily Injury (UMBI) insurance, this coverage will pay your and your passengers’ medical bills if you’re involved in an accident with an uninsured motorist who is at fault. In addition, UM insurance will reimburse you and your passengers for lost wages. UM coverage also kicks in if you are hit as a pedestrian by an uninsured driver, or if you’re the victim of a hit-and-run accident.
Uninsured Motorist Property Damage (UMPD) Coverage—While UM insurance covers injuries, it does not extend to damage to your car or property. For this, you need UMPD coverage. Note that UMPD may not cover damaged property beyond your car, and this option may not be available from your insurer—it depends on what state you live in. In addition, UMPD may not cover hit-and-run accidents.
Underinsured Motorist (UIM) Protection—In some instances, an at-fault driver may have liability insurance, but the policy’s limits do not cover the full extent of damage to your vehicle. In such cases, UIM insurance will cover the shortfall.