Uninsured and underinsured motorist coverage (UM/UIM) explained

What uninsured motorist coverage pays

Your liability coverage protects other people from you. Uninsured and underinsured motorist coverage does the reverse: it stands in for the liability insurance the other driver should have had. The NAIC describes it as coverage that protects the policyholder directly.

Uninsured motorist bodily injury (UM)

UM pays for injuries to you and your passengers when the at-fault driver has no liability insurance. The Insurance Information Institute (Triple-I) and the Texas Department of Insurance both say it also applies to hit-and-run crashes, where the driver is never identified. The Triple-I adds that it can cover you when you are struck as a pedestrian. Payments generally go toward medical bills, lost income and the other damages you could have claimed from the at-fault driver.

Underinsured motorist bodily injury (UIM)

UIM pays when the at-fault driver has insurance, but not enough. That can happen when a driver carries only the state minimum and causes serious injuries. States calculate the payment in different ways. In the approach described by the Massachusetts and New Jersey regulators, your UIM pays up to the difference between your UIM limit and the other driver's liability limit.

Example: you carry $100,000 of UIM per person and the at-fault driver has $25,000 of liability per person, using the difference method. These figures are hypothetical.

For example, Massachusetts's insurance regulator explains that with a $50,000 per-person UIM limit, if you collect $25,000 from the at-fault driver's insurer, the most you can collect from your own UIM is $25,000.

Uninsured motorist property damage (UMPD)

UM and UIM usually cover injuries, not your car. New Hampshire's insurance department says UM there generally pays bodily injury, not damage to your vehicle. Some states add a property damage piece:

• California offers uninsured motorist property damage with a limit of $3,500, and it pays only if the uninsured driver is identified. California also offers a collision deductible waiver that pays your collision deductible when an at-fault uninsured driver damages your car.
• Maryland sets an uninsured motorist property damage minimum of $15,000 per accident.

Without UMPD, damage to your car from an uninsured driver usually falls to your collision coverage, minus your deductible.

How many drivers are uninsured?

The Insurance Research Council (IRC) estimates uninsured drivers by comparing uninsured motorist claims with bodily injury liability claims. Its latest study found 15.4% of drivers were uninsured in 2023, and 33.4% were either uninsured or underinsured. Rates vary widely by state:

Uninsured driving persists even though 49 states and the District of Columbia require liability insurance. The NAIC notes that the cost of uninsured drivers ends up being passed on to insured drivers.

State rules: required, offered or waived

States handle UM and UIM in three broad ways: they require it, they require insurers to offer it and let you reject it in writing, or they leave it optional. These are the rules we confirmed with state regulators and statutes:

New York's supplementary coverage shows how UM and UIM can work together. The state's Department of Financial Services says SUM adds protection against underinsured drivers and for accidents outside New York, cannot exceed your bodily injury liability limits, and is included at those limits automatically unless you decline it or choose less in writing.

Requirements change, so confirm your own state's rule with its insurance department or the state minimums tool.

Stacking uninsured motorist coverage

Stacking means adding together the UM limits for each vehicle on your policy to create a larger limit for one accident. Whether you can choose depends on your state and insurer. Florida's statute is a clear example of how it can work: insurers may sell policies stating that UM coverage on two or more vehicles is not added together, and when the injured person is in a vehicle, the coverage on that vehicle applies. Insurers offering that non-stacking limitation must file rates with a UM premium at least 20% lower.

Example: three cars on one policy, each with $25,000 of UM per person. These figures are hypothetical.

Stacking can make sense for households with several cars and serious injury exposure. Ask your insurer whether stacking is available in your state and what the price difference is.

How to choose uninsured motorist limits

1. Find out whether your state requires UM or UIM, requires an offer, or leaves it optional.
2. Note your liability limits. In several states, such as New Hampshire and Maine, your UM limits are tied to them, and New York's SUM defaults to them.
3. Consider your health insurance and disability coverage, and what they would not pay after a serious crash, such as lost income beyond sick leave.
4. Remember that 33.4% of drivers were uninsured or underinsured in the IRC's latest estimate.
5. Ask for quotes at your liability limits and at the minimum, so you can see the cost of matching them.
6. If you have several cars and your state allows it, ask about stacked versus non-stacked UM.
7. Before you sign a rejection or waiver form, make sure you understand what you are giving up, and ask how to add the coverage back later.