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uninsured and underinsured
motorist coverages aren’t necessary

debunking a car insurance myth

So you're a savvy car insurance shopper comparing your quotes online. You keep noticing something called uninsured/underinsured motorist coverage, and each time you see it you think, "Why would I need that? Everybody's got to have insurance."

It's sound logic. And from a legal standpoint, you're absolutely right. (Unless you happen to live in New Hampshire, where car insurance isn't required.) But as you know, people break the law. And an accident with an uninsured/underinsured driver could be costly. That's why uninsured/underinsured motorist coverage exists.

Uninsured drivers are out there

Today, approximately 1 in 7 drivers (PDF) in the United States are driving without even basic coverage according to the Insurance Research Council.

The Insurance Research Council has found that the health of the economy has a direct impact on the uninsured motorist rate. In tough economic times, drivers tend to test the law more to avoid monthly premiums, and that can have serious consequences for those who are properly insured.

The consequences of getting in an accident with an uninsured driver can be pretty grim. If the uninsured driver is at fault in your accident and you don't have uninsured motorist coverage, you may have to seek damages through the courts. And even then, there's a good chance the driver won't have funds to cover your expenses.

And those with minimal coverage (or underinsured motorists) can also cause big problems for other drivers, such as when their bare-bones bodily injury limits fail to cover all your medical bills.

We'll get more in-depth on the consequences of going without uninsured/underinsured motorist coverages, but first let's define these coverages and what they do.

Underinsured/uninsured motorist coverage defined

Here's where things get a little complex. First off, not all states offer this coverage (while others require it). Second, as independent political entities within a federal government are wont to do, each state that does offer these coverages handles them differently. So differently, in fact, that it's hard to decide whether to say "this coverage" or "these coverages." In most states, however, underinsured and uninsured coverages are distinct.

There are 5 different flavors of underinsured/uninsured motorist coverage, and they come in 2 standard types familiar to anyone with car insurance: bodily injury liability and property damage liability:

  • Underinsured motorist bodily injury
  • Uninsured motorist bodily injury
  • Underinsured motorist property damage
  • Uninsured motorist property damage
  • Underinsured/uninsured motorist bodily injury

We cover all of these in greater depth in our jargon-free car insurance glossary, but the long and short of all these coverages is that they help pay for damages caused by a collision with an uninsured or underinsured motorist.

So what happens if I get into an accident with an underinsured/uninsured driver?

The consequences of being hit by an underinsured/uninsured driver depend on your state's insurance laws. States define themselves as either "no-fault" or "tort" as far as insurance goes.

In no-fault states, drivers go to their own insurance company for payment after an accident. The question of who is at fault in the accident doesn't usually enter into the equation.

In tort states, car insurance companies pay for damages based on who is at fault. So if you're in an accident where the other driver is deemed completely at fault, their company would have to cover all damages — yours and their own.

As you can see, colliding with an uninsured or underinsured driver is a simpler matter in a no-fault state: You simply file a claim with your car insurance company and they handle your needs. However, you might still want to consider uninsured/underinsured motorist coverage if you live in a no-fault state due to the extra financial protection it provides. For instance, if you're hit and injured in a collision with an uninsured driver, your health insurance will pay your medical bills — but they won't help you with lost wages or pain and suffering compensation, things the other driver's liability policies would normally provide. Thankfully, uninsured/underinsured coverage can help.

If the crash happens in a tort state, on the other hand, you may have to sue for damages — hence the "tort." This can be a costly and stressful process. And considering that an uninsured or underinsured driver probably lacks insurance due to limited funds, chances of payment may be slim. Your own policy will of course cover you, but only up to your selected limits. If your limits are too low to cover all costs, you'll have to choose between paying out of pocket or litigating.

Note that some states have "contributory negligence" laws, which mean that insurance companies pay claims based on degree of fault. So if you're deemed to be 21 percent at fault in a collision, your insurance company will pay 21 percent of damages.

Another excellent reason to buy uninsured motorist coverage

Besides covering the costs involved in paying for an accident with an uninsured motorist, there's one more great reason to buy uninsured motorist coverage: hit-and-run collisions.

If your car is struck by a driver who refuses to stop and trade insurance info, uninsured motorist property damage coverage will provide full compensation for the accident, depending on your state's laws. The following states do not allow the application of uninsured motorist property damage coverage in hit-and-run collisions:

  • California
  • Colorado
  • Georgia
  • Illinois
  • Ohio
  • Louisiana

In those states, your collision coverage applies as it normally would.

Save yourself the pain — and the money

Unfortunately for the insured, there are too many uninsured and underinsured drivers out there, and the consequences of skimping on uninsured/underinsured motorist coverage can be both expensive and stressful. So save yourself some anxiety and some cash by protecting yourself from those who aren't properly covered.

In a sample quote for a safe, experienced driver behind the wheel of a new Fiesta, we found that uninsured motorist bodily injury limits of $50,000 per person and $100,000 per incident cost as little as $50 for a 6-month policy, while uninsured property damage coverage came in at less than $5.

A little extra protection can go a very long way. Find out how much uninsured driver coverage might cost when you get a quote.

Related links

What is a collision deductible waiver?
Learn about another way to protect yourself against the consequences of an accident with an uninsured or underinsured motorist.

Insurance by state
Want to know more about your state's insurance standards? You got it.

Myth: a lapse in car insurance coverage won't affect your rate
Find out how going without car insurance coverage can affect you.