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What is UM Coverage?

Uninsured motorist (UM) coverage is a form of auto insurance that protects you if you are hit by an uninsured driver or are involved in a hit-and-run. If you are in a hit-and-run and cannot track down the at-fault driver, then your only source of compensation for your damages is generally through UM insurance. On the other hand, if you are hit by an uninsured driver but do not have UM coverage, you can still seek recovery from the individual who hit you, but this can be extremely difficult. Unless you happen to be hit by an individual who has the money to pay for your losses and is also willing to pay, you will probably have to sue the person and obtain a judgment in court that allows you to collect money from them.

Depending on your state’s collection laws and the assets/income of the driver who hit you, collecting judgments against individuals can range from difficult to impossible. Many uninsured drivers do not have a lot of cash on hand, so even if you get a large judgment, there will often not be enough funds available to pay you. You might recover some money, but if your damages are high, it is possible you will never recover anything but a small fraction. Thus, UM coverage is the best way to ensure you are compensated when an uninsured driver hits you, and it is the only source of compensation if you are involved in a hit-and-run.

What is UIM Coverage?

Coupled with UM is underinsured motorist (UIM) coverage, and together they are referred to as UM/UIM. UIM coverage protects you if another driver is at fault but has an insurance policy that is too low to compensate your losses. For example, if the other driver’s liability policy pays only up to $30,000, but your medical bills cost $150,000, your own UIM protection will then take effect to offset the extra damages. If you do not have a UIM policy or if the liability and UIM policies combined are not enough to compensate your loss, your only option is to attempt recover the remainder from the at-fault driver.

State laws vary on when a UIM policy kicks in. Some states require your UIM policy to exceed the other driver’s policy for you to recover, and then you can only recover the difference between the liability policy and your UIM policy. In these states, if you have a $50,000 UIM policy and the driver who hits you has a $30,000 liability policy, you can recover up to $20,000 in UIM benefits after exhausting the $30,000 from liability. Other states, like Texas, allow the UIM policy to kick in as long as there are still damages unpaid by the liability policy. In Texas, your $30,000 UIM could be added to the $30,000 liability if your damages total at least $60,000.

Do I need it?

Every driver should purchase UM/UIM coverage. Statistics from 2019 show that anywhere from 3% to 30% of drivers (depending on your state) are uninsured. Moreover, the vast majority of insured drivers have minimum policies, which range from $10,000 to $50,000 depending on the state. Even if you are never involved in a catastrophic wreck, driving without UM/UIM coverage can be very risky due to the high percentage of uninsured drivers. And even if you live in a state with relatively few uninsured drivers, you could encounter uninsured drivers visiting from out-of-state or while you visit another state.

In the event that you are involved in a catastrophic accident, the odds are far too high that the other driver will have either no insurance or minimum insurance, and either scenario leaves you with less-than-full recovery. Thus, due to the significant harm that could befall you if you are involved in a hit-and-run or are hit by an uninsured/underinsured driver, UM/UIM coverage is essential no matter where you live or what kind of car you drive.