Uninsured Motorist Coverage: What is Uninsured Motorist Coverage and Why Must You Have It?

I’m sure you’re not one of them, but unfortunately, there are plenty of drivers out there who hit the highways without any liability insurance. Although it varies from state to state, across the country, if someone is injured in an auto accident, the chances are about one in seven that the at-fault driver is uninsured. (Insurance Research Council study, 2006)  Should you be injured in a car crash with an uninsured, at-fault driver, you can receive compensation for your injury-related expenses from your own insurance policy if your policy provides you with Uninsured Motorist (UM) coverage.  Some policies also offer Underinsured Motorist coverage, (UIM), in case you are hit by a driver who has liability insurance, but does not carry sufficient limits to cover all of your damages.

So what is UM/UIM coverage?  In essence, if the other driver is uninsured or underinsured, your own insurance steps in and takes the place of the insurance coverage that the other driver should have had. Your insurance company handles your claim almost as a routine liability claim you would have made against the other driver’s insurer.  It can, at times, put you at odds with your own carrier because acting as an opposing insurer, your carrier will likely question your expenses and have you substantiate everything before they will make you an offer to settle your claim.  Even though you are their insured, the claim is handled like you are not.  In addition to covering your medical expenses, UM coverage will take care of your lost wages, pain and suffering, and any other injury-related expenses you may have. 

When it comes time to settle your UM or UIM claim, you can negotiate with your insurer just like you would have if it was the other driver’s insurance company.  The adjuster will make you an offer and you can either accept it if you think it is fair, or make a counter-demand with a higher figure.  Some car accident victims resort to hiring an attorney to settle with their insurer for their UM/UIM claims and occasionally these matters do wind up in court.  More often than not, however, you will be able to get a reasonable settlement on your own. 

Must I purchase UM/UIM coverage?
UM/UIM insurance is generally not mandatory.  Although you don’t have to have it, and it tends to be expensive, with so many uninsured drivers on the road, I would encourage you to bite the bullet and buy it.  It is especially crucial if you do not have health insurance or you have a high health insurance deductible.  In either case, take heed: you could wind up paying thousands of dollars out-of pocket depending on the severity of your injury.  Buying UM coverage could save you many times the premium in the long run.