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How Does Uninsured Motorist Coverage Work?

Though liability coverage is legally required of drivers in almost all states, some car owners have chosen to drive around without one. What then happens when they crash into you?

You’ll be left alone with medical bills for your pains and injuries, coupled with thoughts of how to repair your damaged car. All of these possibly run into thousands of dollars out of your pocket since the at-fault driver has no car insurance whatsoever.

Nobody wants that. Still, you can’t control the actions of other drivers, only yours. That’s why I’m answering the question of how does uninsured motorist coverage work because that’s the way out of incurring huge debt due to the carelessness of fellow motorists.

There would’ve been no need for uninsured motorist coverage if everyone followed state laws and bought liability coverage like you did.

But everyone won’t.

And that’s why I’ll also share the types of uninsured motorist coverage, what exactly this insurance policy covers, how to purchase it, how insurance companies pay out this coverage, and other common questions surrounding this policy.

Related: How Do I Find Out If My Car Is Insured?

What is an uninsured motorist coverage?

An uninsured motorist coverage is an insurance policy that provides compensation to you and your car passengers when you’re hit by a driver who has no car insurance.

Popularly referred to as UM coverage, it caters to your medical bills and that of your car occupants, as well as reimburses you for damages to your car.

Whenever a driver without car insurance rear-ends or collides with you, you’re at liberty to take out your uninsured motorist coverage.

The UM coverage is mandatory in some states while being optional in other states.

Difference between uninsured and underinsured motorist coverage

Uninsured motorist coverage is easily confused with underinsured motorist coverage.

While uninsured motorist coverage pays out medical and property damages to you when hit by a driver with no car insurance, underinsurance motorist coverage settles you when a driver with inadequate coverage on their insurance policy crashes into you.

Drivers are underinsured if the coverage they move around with is either below the minimum state requirements or is grossly insufficient to fully offset their losses from the accident.

Most people buy both uninsured and underinsured motorist coverage together.

Types of uninsured motorist coverage

You’ll need to know the types of uninsured motorist coverage before knowing how it works, so you can maximize your use of it.

There are two types of coverage, and each of them covers specific areas of loss you’ll encounter when an uninsured driver crashes into you. Let’s take a look at them.

Uninsured motorist bodily injury coverage (UMBI)

When you meet your insurer to buy uninsured motorist coverage, they’re likely to present UMBI coverage to you.

Uninsured motorist bodily injury coverage caters to your medical bills resulting from the auto crash like surgery, diagnosis, treatment, prescriptions, and then lost wages, pain and suffering damages, and sometimes funeral costs.

Everything concerning your medical treatment and that of your car passengers is covered under UMBI coverage. It’s also activated when you’re hit by an uninsured driver on the pedestrian walkway or on a bike.

It’s usually recommended to carry the same amount of UMBI coverage limits as your liability coverage.

If your liability coverage is 50/100, meaning a limit of $50,000 spent per person and $100,000 spent per accident, it’s advisable to also carry a UMBI coverage limit of 50/100.

That way, you’ll have enough coverage to cover your hospital bills in case the at-fault driver turns out to have no insurance.

Uninsured motorist property damage coverage (UMPD)

Uninsured motorist property coverage is not available in all states, unlike uninsured motorist bodily injury coverage.

UMPD coverage settles the cost of your car repair and any other property like fences or road signs that were destroyed by an uninsured driver.

It might come with a deductible, as it is a little more expensive than uninsured motorist bodily injury coverage.

Sometimes, UMPD is used in other instances that aren’t exactly about car and property repairs. It could be used to hire a rental car while your car is damaged or pay the deductible for another insurance coverage like collision coverage.

You’ll just need to make an agreement with your insurer on how you want to spend this coverage.

How does uninsured motorist coverage work?

No matter how careful you try to avoid uninsured drivers and how the law tries to crack down on them, it’s estimated that 12% of drivers still move around without car insurance in the United States.

And not only that, people with uninsured motorist coverage shell out almost $2 billion yearly.

That means that uninsured drivers are still in the business of throwing car owners into auto repair debts and hospital bills.

You need to know how uninsured motorist coverage works so you can be on top of the situation when the unexpected happens.

An uninsured motorist coverage comes into play when you get hit and in the cause of inspecting the car damage, you find out that the at-fault driver has no insurance.

Most uninsured drivers wouldn’t want to stop when they crash into another car. So, they’re more likely to engage in hit-and-run accidents.

Even in hit-and-runs, uninsured motorist coverage can still be activated to reimburse you for medical costs and car repairs.

After taking pictures of the accident scene and the extent of damage to your car, you can file a claim with your insurance company and take out your uninsured motorist coverage because the driver ran away or the driver is without car insurance.

When buying car insurance policies, you can choose to purchase uninsured motorist bodily injury and leave out uninsured motorist property damage coverage and vice versa. Or you can buy both types of coverage.

Related: How to File Insurance Claim Against Other Driver

But you’ll do well to ask your insurer if any of these types of uninsured motorist coverage is required in your state, because either a particular type is needed or both coverages are required in states that make uninsured motorist coverage compulsory.

Uninsured motorist coverage usually has cheap premiums that won’t tell on your overall car insurance policies.

In some states, uninsured motorist property damage comes with a deductible.

What does uninsured motorist coverage cover?

Uninsured motorists cover the following physical and economic losses:

  • Car damages from uninsured drivers, including hit-and-runs
  • Medical costs from accident-related injuries
  • Pain and suffering damages
  • Funeral and cremation costs

How to purchase uninsured motorist coverage

Purchasing uninsured motorist coverage requires that you first know your state’s requirements concerning this policy. Is it mandatory in your state or not? Your insurance agents will be happy to let you know.

If it is mandatory, then you’ve got to add it to your policy. Contact your insurance company to find out the cost of adding it to your policy.

But don’t stop there. Sample uninsured motorist coverage quotes from other carriers to see if you can find it cheaper out there.

When you’ve agreed on the insurance company that’ll carry your uninsured motorist coverage, then you can sort out the coverage limits.

Most carriers have a pattern of mirroring your uninsured motorist coverage with your liability coverage because some states mandate that.

This means, they prompt you to buy the same amount of uninsured motorist coverage as your current liability coverage. If you have a liability coverage of 25/50, meaning $25,000 spent per person and $50,000 spent per accident, then you’ll need to also have an uninsured motorist coverage limit of 25/50.

Other states allow you to select your coverage limit independent of your liability coverage.

After you’ve chosen your coverage limit, you can choose to bundle your car insurance with your home insurance. Some insurers give a discount for combining both.

If not, then review the terms of the policy and purchase the uninsured motorist coverage.

What does it mean to “stack” uninsured motorist coverage?

Stacking is a strategy used to make claims on two or more uninsured motorist policies in order to get more coverage.

Let’s say you have two cars with 15/25 uninsured motorist coverage for each. This means that each of those two cars has $15,000 of uninsured motorist coverage per person and $25,000 per accident.

Assuming an uninsured driver crashes into one of the cars and your medical bill runs into the sum of $19,000. Taking out the car’s uninsured motorist coverage of $15,000 won’t be enough.

You’ll need to stack it with the other car’s uninsured motorist coverage to make $30,000 worth of coverage available to settle your hospital costs.

Stacking is not available in all states, and neither do all insurance companies make use of it. Discuss with your insurance agent to know if your insurance company has an anti-stacking policy you need to adhere to.

It’s good to know you have this option in case stacking is approved by your insurer and in your state.

States that require uninsured motorist coverage

Some states have laws that make uninsured motorist coverage mandatory. They are:

  • Nebraska
  • Minnesota
  • Oregon
  • South Carolina
  • Vermont
  • South Dakota
  • North Carolina
  • New York
  • North Dakota
  • Washington D.C.
  • Maine
  • Maryland
  • Connecticut
  • Virginia
  • Illinois
  • Wisconsin
  • New Jersey
  • West Virginia

Do I have to pay a deductible for uninsured motorist coverage?

Some states require separate deductibles for both Uninsured Motorist Bodily Injury (UMBI) and Uninsured Motorist Property Damage (UMPD) coverages, while others maintain a single deductible for both types of policies.

In most states, however, UMBI doesn’t require a deductible, but UMPD may need a deductible. Only uninsured motorist coverage taken out to repair a property such as a fence may require a deductible.

Related: How Does Car Insurance Deductible Work?

Bryan Grey
Bryan Grey
Bryan is a car insurance writer that shares insightful auto insurance advice to help car owners make the best of different car insurance policies available to them.
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