“Laws in most states have been ineffective in reducing the number of drivers who are uninsured,” the Insurance Information Institute (III) explained in a backgrounder on uninsured drivers on its website. “There are many reasons for this. Some drivers cannot afford insurance and some drivers with additional charges for accidents or serious traffic violations do not want to pay the high premiums that come with a poor driving record.
“With the estimated rate of uninsured drivers in the US nearing 13%, it is costly to track down violators of mandatory insurance laws. State insurance departments and insurance companies are using new techniques to combat the problem of uninsured motorists, including using electronic tools to quickly verify auto insurance.
However, the issue remains, and because of this, even if uninsured motorist coverage is not mandatory in all states, it may be worth considering for many of the nation’s drivers.
Read more: America’s top auto insurers in 2022 – a region-by-region breakdown
What is uninsured motorist coverage?
Under III, uninsured motorist coverage, also referred to as UM, is designed to provide compensation to policyholders when an at-fault driver does not have liability insurance or illegally leaves the scene of a crash.
The organization added that while this type of policy does not reduce the number of uninsured drivers on the road, it does provide a way for drivers to deal with the financial consequences of accidents involving hit-and-run and uninsured drivers.
How does uninsured motorist coverage work?
Generally, when an accident occurs and the other driver is at fault, their auto insurance should cover the car repair and medical expenses incurred by the innocent driver and their passengers. However, if the at-fault driver does not have coverage and cannot afford to pay, the other driver may end up footing the bill.
This is where uninsured motorist coverage comes in handy. This type of policy bridges the gap between the costs incurred by the insured driver and the at-fault motorist’s ability to pay.
UM is usually tied to uninsured motorist (UIM) coverage, which works almost exactly the same. The only difference is that UIM provides financial protection when the at-fault driver has insurance, but their coverage is not enough for all expenses.
Read more: Revealed – the most expensive and cheapest states for car insurance in 2022
What does uninsured motorist insurance cover?
Uninsured motorist policies offer two types of protection. These are:
- Uninsured Motorist Bodily Injury (UMBI) coverage: This covers medical bills, pain and suffering costs, lost wages, and funeral expenses that result from a collision with an at-fault uninsured motorist. Some policies also cover accidents involving pedestrians and cyclists.
- Uninsured Motorist Property Damage Coverage (UMPD): This pays for damage to the policyholder’s vehicle or property after a collision with an at-fault motorist who does not have insurance. However, some policies require the insured to pay a deductible.
Some states also allow “stacking,” which benefits those who own more than one insured vehicle. This practice gives drivers the opportunity to combine UMBI limits for multiple cars, either in a single policy or in several policies under the name of the insured, increasing the total amount of coverage.
“[To illustrate], in a three-car household where uninsured motorist liability limits are $20,000, in a state that does not prohibit aggregation, the amount available to pay a claim in an accident with an uninsured motorist would be $60,000, explained III. “[But] because bundling increases the cost of auto insurance, about half of the states prohibit bundling.”
Read more: Revealed – the most expensive cars to insure in the US
Which States Require Uninsured Motorist Coverage?
There are more than 20 states in the US where uninsured motorist coverage is mandatory. In others, insurance companies are required to offer UM policies, but their purchase is not mandatory. Fewer states require drivers to obtain underinsured motorist coverage.
Below is the complete list of states that require uninsured and underinsured motorist coverage, along with the respective minimum liability limits.
|
State |
Required Coverage and Minimum Limits of Liability |
|
CONNECTICUT |
UMBI: $25,000 per person, $50,000 per accident |
|
District of Columbia |
UMBI: $25,000 per person, $50,000 per accident UMPD: $5,000 per accident |
|
Illinois |
UMBI: $25,000 per person, $50,000 per accident |
|
Kansas |
UMBI: $25,000 per person, $50,000 per accident |
|
Maine |
UMBI: $50,000 per person, $100,000 per accident |
|
Maryland |
UMBI: $30,000 per person, $60,000 per accident UMPD: $15,000 per accident |
|
Massachusetts |
UMBI: $20,000 per person, $40,000 per accident |
|
MINNESOTA |
UMBI: $25,000 per person, $50,000 per accident |
|
Missouri |
UMBI: $25,000 per person, $50,000 per accident |
|
Nebraska |
UMBI: $25,000 per person, $50,000 per accident |
|
New Hampshire |
UMBI: $25,000 per person, $50,000 per accident UMPD: $25,000 per accident |
|
New York |
UMBI: $25,000 per person, $50,000 per accident |
|
North Carolina |
UMBI: $30,000 per person, $60,000 per accident UMPD: $25,000 per accident |
|
North Dakota |
UMBI: $25,000 per person, $50,000 per accident |
|
Oregon |
UMBI: $25,000 per person, $50,000 per accident |
|
South Carolina |
UMBI: $25,000 per person, $50,000 per accident UMPD: $25,000 per accident |
|
South Dakota |
UMBI: $25,000 per person, $50,000 per accident |
|
Vermont |
UMBI: $50,000 per person, $100,000 per accident UMPD: $10,000 per accident |
|
Virginia |
UMBI: $25,000 per person, $50,000 per accident UMPD: $20,000 per accident |
|
West Virginia |
UMBI: $25,000 per person, $50,000 per accident UMPD: $25,000 per accident |
|
Wyoming |
UMBI: $25,000 per person, $50,000 per accident |
Source: Insurance Information Institute, January 2022
In New Hampshire and Virginia, auto insurance is not mandatory, but if purchased, it must include uninsured motorist coverage.
How much does uninsured motorist coverage cost?
Premiums for uninsured motorist coverage are relatively less expensive than other types of auto insurance policies, although prices may be higher in states with a higher percentage of uninsured drivers. On average, UM coverage costs less than standard liability insurance.
Personal finance firm NerdWallet puts the price of uninsured motorist coverage at about less than half the price of a regular liability policy, while financial information website MarketWatch says drivers can get UM coverage for as little as 5 to $10 extra on their monthly premiums.
Read more: Ten ways drivers can save on auto insurance premiums
Is getting uninsured motorist coverage worth it?
Although not mandatory in most states, there are several reasons why drivers should consider getting UM coverage, according to experts.
“You may be required to purchase uninsured motorist coverage depending on where you live, but even if you’re not, it’s worth considering,” NerdWallet advised. “This type of insurance is relatively inexpensive and can save you tens of thousands of dollars if you are hit by an uninsured driver.”
He added that even for those with health insurance, buying UM policies has its share of advantages.
“While your health insurance should pay for medical treatment after an accident, uninsured motorist coverage can still be beneficial, as it can cover ongoing expenses such as long-term care,” the firm explained. “Plus, there’s usually no deductible for UMBI coverage, which can offset a high health insurance deductible.”