According to a study by the Insurance Research Council, nationally, 1 in 8 drivers on the road is driving without insurance. In the state of Texas, the odds are only slightly better, with 1 in 12 drivers failing to obtain any auto insurance before hitting the roads. So what happens if one of these irresponsible drivers causes an accident?
Uninsured motorist (UM) coverage and underinsured motorist (UIM) coverage are types of auto insurance that you can add to your policy. This coverage is intended to provide protection if you are involved in an accident where the at-fault driver is uninsured or not insured enough to cover your medical and vehicle repair costs.
Related Reading: What is the Penalty for Driving Without Insurance in Texas?
What is the Difference Between Uninsured and Underinsured Motorist Coverage?
The difference between uninsured and underinsured motorist coverage is whether or not the driver that is at-fault has no insurance or not enough insurance. The terms of what is covered by the two types of insurance does not really vary. Uninsured and underinsured motorist protection provides coverage for your injuries, your passengers’ injuries and damage to your vehicle.
- Uninsured Motorist Coverage: protects you and your property after an accident in which the at-fault driver does not have car insurance
- Underinsured Motorist Coverage: protects you and your property when the at-fault driver has insurance but not enough insurance to cover all the damage.
Uninsured motorists coverage also helps pay for hit-and-run damages when the driver cannot be found. Underinsured motorist coverage steps in when you are in an accident and the at-fault driver’s liability limits are too low to cover all of the damages. Overall, the important part of having these types of coverage is so you are not stuck paying for medical expenses or vehicle damages that are not your fault.
What Are the 2 Types of Uninsured and Underinsured Motorist Coverage?
Similar to auto liability coverage, uninsured and underinsured motorist coverage involve two parts: bodily injury and property damage.
- UM/UIM bodily injury (BI) may pay medical bills for both you and your passengers.
- UM/UIM property damage (PD) may pay for damage to your vehicle.
Do I Need Both Uninsured and Underinsured Motorist Coverage?
You are able to decide if this is coverage you want on your policy. In Texas, it is required that insurance agents offer you both uninsured and underinsured motorist coverage. If you do not want it, then you must submit a denial in writing.
There is no other type of auto coverage that protects you from uninsured or underinsured drivers. If you want to proactively plan for the unexpected, then this is a wonderful addition to your policy. The peace of mind this coverage provides could be worth having. No one wants to be stuck paying for damages and medical expenses that someone else causes.
Get The Right Auto Insurance with TGS Insurance!
Don’t let the complications of insurance steer you away from getting the right auto insurance coverage for you. We work with over 55 A-rated (or better) auto insurance carriers to find a policy with the coverage you need at a rate you can afford. Use our hassle-free auto quote tool to get a fast and accurate quote today!
FAQs
Uninsured or underinsured motorist coverage: Is used when the at-fault driver doesn't have enough (or any) liability coverage. Can save you from having to pay out of pocket for a car accident you didn't cause. Usually costs more to add to your policy in states with more uninsured drivers.
What is the disadvantage of uninsured motorist coverage? ›
UM/UIM insurance will probably set you back no more than $100. It could cost you more than that, however. The typical deductible is $250 for property damage (but $0 for bodily injury). The $250 must come out of your own pocket–you cannot apply liability insurance payouts to cover this amount.
How does under insurance work? ›
Being "underinsured" means a person has insurance coverage, but the limits may not be high enough to cover the full expenses of a claim. For example, each state requires auto liability coverage and sets minimum limits that drivers must purchase.
What is an example of underinsured? ›
Car insurance
You cause an accident and are deemed liable for the other driver's medical expenses of $50,000. Since you only carry $25,000 of bodily injury, you are technically $25,000 underinsured for this claim, which you would be responsible for paying out of pocket.
Which of the following would be considered an uninsured vehicle? ›
A hit-and-run vehicle can't be identified and is therefore considered uninsured.
Does uninsured motorist insurance coverage protect you when a motorist leaves the scene of an accident? ›
Uninsured motorist coverage protects you if you're hit by a driver who doesn't carry liability insurance or if the other driver leaves the scene without exchanging information with you.
Why is uninsured motorist important? ›
Uninsured motorist coverage protects you if you're hit by a driver who has no auto insurance. Underinsured motorist coverage, which is usually offered alongside uninsured motorist coverage, protects you if you're hit by a driver who doesn't have enough coverage to pay for the damages or injuries they caused.
What are the advantages of uninsured motorists coverage in meeting the problem of uninsured drivers? ›
The advantages of uninsured motorists coverage is: The claims settlement is faster and more efficient than tort liability system. A driver who is not at fault can claim full compensation, including amounts for pain and suffering, from their insurer in the event of a crash.
What is the difference between uninsured motorist stacked and unstacked? ›
Stacked car insurance allows policyholders to combine the UM/UIM coverage limits for multiple vehicles on the same policy, providing potentially higher coverage limits. Instead, unstacked car insurance does not aggregate limits across vehicles on the policy and will potentially have lower premiums.
What is the truth about underinsured motorist coverage? ›
Underinsured motorist coverage (UIM) pays medical bills for you and your passengers when a driver without enough liability coverage causes an accident. So, if a driver with minimum insurance limits can't fully pay for injuries they cause to you, UIM coverage will step in to help out.
When it comes to insuring your home, the 80% rule is an important guideline to keep in mind. This rule suggests you should insure your home for at least 80% of its total replacement cost to avoid penalties for being underinsured.
What are the risks of underinsurance? ›
What are the risks of underinsurance? Even if an insurer regards your property as underinsured, the most the insurer will pay is the sum insured. So, if you're underinsured and need to make a claim that exceeds the sum insured, you'll be out of pocket.
What are three things that could happen if you are underinsured? ›
Some risks you may expose yourself to by being underinsured are as follows.
- The Costs of Emergency Home Repairs Can Add Up. ...
- You May Not Be Adequately Covered For Flood Damage. ...
- Your High-Value Items Might Not Be Sufficiently Covered. ...
- Your Policy May Be Cancelled. ...
- You May End Up With a High Deductible After An Accident.
How do you calculate underinsurance? The formula for calculating underinsurance is: Sums insured /replacement cost X the loss amount = The claims settlement*.
Do I need uninsured motorist coverage if I have collision and comprehensive in CA? ›
California law does not require you to carry uninsured motorist (UM) or underinsured motorist (UIM) coverage—so, legally, you don't need either one. However, UM/UIM is an important and commonsense coverage to carry.
What does pip stand for and what does it cover? ›
Personal injury protection (PIP), also known as no-fault insurance, covers medical expenses and lost wages for you and your passengers if you're injured in an accident.
What is covered under the collision and comprehensive coverage? ›
They differ in the types of incidents they cover. Collision insurance helps cover repairs if you collide with another vehicle or object. Comprehensive covers repairs that do not result from collisions – for instance, theft, vandalism, animal damage, fires, and more.
What does "uninsured" mean? ›
: lacking insurance : not insured.
What do the numbers 25 50 25 mean in insurance terms? ›
A car insurance policy with 25/50/25 means it covers up to $25,000 per person and $50,000 per accident for bodily injury liability and up to $25,000 per accident for property damage liability.
