Are you safe on the road?
ARE YOU SAFE
ON THE ROAD?THE BENEFITS OF UNINSURED MOTORIST COVERAGE

You’ve done your due diligence and have been paying car insurance faithfully for years. But what about the driver that clips you at a four-way stop? If another driver is uninsured or underinsured, you could find yourself in serious trouble – even with the protection of a car insurance policy.

According to an Insurance Research Council (IRC) study, one in seven drivers in the US is uninsured.1

Wait – aren’t drivers in every state required by law to purchase auto insurance? Yes, uninsured drivers are required to carry liability coverage in nearly every state, plain and simple. When a driver hits the open road without proper car insurance, it causes an even greater problem for the insured driver.

According to the senior VP of the IRC, Elizabeth A. Sprinkel, “This forces responsible drivers who carry insurance to bear the burden of paying for injuries caused by drivers who carry no insurance at all.”

Whether you like it or not, uninsured motorists on
the road will affect you as an insured driver.

Uninsured Driver Graphic

You may benefit from special auto insurance protection against uninsured/underinsured motorists in an accident.

What Is Uninsured Motorist Coverage?

Uninsured Driver Graphic

The purpose of uninsured motorist coverage is to provide financial protection for you as an insured driver if you get into an accident caused by an uninsured or even underinsured driver.

Uninsured motorist coverage may be referred to as:

Uninsured Driver Graphic

UM (Uninsured Motorist) Coverage protects insured drivers
against uninsured drivers in an at-fault accident.

UIM (Underinsured Motorist) Coverage protects insured drivers against underinsured drivers in an at-fault accident.

If a driver runs a red light and T-bones you at an intersection, you may automatically assume that their insurance coverage will pay for your damages. That’s how car insurance is supposed to work – in a perfect world.

But what happens if the other driver doesn’t have
car insurance in an at-fault accident?

First and foremost, the uninsured driver is breaking the law by driving without insurance. If an uninsured driver causes an accident, or worse, hits and runs, you will have to pay for any vehicle damages or injuries caused to the occupants of your vehicle. In some cases, an at-fault driver may not have enough insurance coverage to pay for damages or injuries, causing the excess to yet again fall on your shoulders.

Let’s review.
Uninsured/underinsured
motorist coverage can cover:

  • Damages or injuries in an accident caused by a driver without insurance.
  • Damage or injury costs that aren’t covered by the other driver’s limited insurance when the other driver is at-fault.
  • Damages or injuries from a hit-and-run accident.

UNINSURED MOTORIST COVERAGE IN A CAR
INSURANCE POLICY MAY BE CATEGORIZED IN TWO
DIFFERENT WAYS:

Uninsured Motorist Property Damage (UMPD): Provides coverage for damages to your vehicle or other property in an accident with an uninsured/underinsured motorist.

Uninsured Motorist Bodily Injury (UMBI): Provides coverage for injuries, medical expenses, and/or lost wages for you and other passengers in your vehicle in an accident with an uninsured/underinsured motorist.

As we already know, car accidents aren’t cheap. Since one in seven motorists drives uninsured, the odds are high that you may get into a car accident with an uninsured or underinsured driver within your lifetime.

  • Uninsured Driver Graphic  16 – 30 %
  • Uninsured Driver Graphic  14 – 15 %
  • Uninsured Driver Graphic  10 – 13 %
  • Uninsured Driver Graphic  0 – 9 %

Depending on where you live, these odds may increase even further.

IRC statistics estimate the top five states with the highest percentage of uninsured drivers:1

  • MISSISSIPI
  • NEW MEXICO
  • TENNESSEE
  • OKLAHOMA
  • FLORIDA

The five states with the lowest percentage of uninsured drivers

  • VERMONT
  • PENNSYLVANIA
  • MASSACHUSETTS
  • MAINE
  • NEW YORK

Why Drive Uninsured?

Uninsured Driver Graphic

Why are so many motorists driving uninsured? If you would never dream of driving without auto insurance, this may be hard to comprehend. However, in many states, car insurance is difficult, if not impossible, for many drivers to afford on top of rent or mortgage, utilities, childcare, and more.

As a result, 14% of car accidents are caused by uninsured motorists.2

In light of the recent economic downturn, the number of uninsured drivers has risen considerably. Many drivers have allowed their policy to lapse, even though basic liability car insurance is required by law in 49 states. For these drivers, the cost to insure their vehicle each year may be exorbitant and far too expensive to consider within a modest budget.

Some of the most expensive states for auto
insurance are depicted in the chart below:2

Uninsured Driver Graphic

Let’s talk figures for a moment. If you happen to live in a pricier state like New Jersey or Florida, you may pay a little over $1000 in annual car insurance. If you live in Washington, DC, car insurance rates may rise as high as $1126 per year. This is far above the national average for annual car insurance at $789.

If car insurance rates are virtually unaffordable in your area of the country, it may be tempting to drop coverage or let it lapse altogether. Yet choosing to drive without the proper car insurance coverage is not without its share of risk.

Uninsured Driver Graphic
Uninsured Driver Graphic

If car insurance rates are virtually unaffordable in your area of the country, it may be tempting to drop coverage or let it lapse altogether. Yet choosing to drive without the proper car insurance coverage is not without its share of risk.

  • Uninsured Driver GraphicAdditionally, an uninsured motorist will lose certain rights in an accident under no pay/no play laws in states like Alabama, California, Iowa, Louisiana, Michigan, New Jersey, North Dakota, and Oregon. An uninsured driver in an accident will automatically forfeit the right to sue for related damages, such as lost wages or pain and suffering. In some states, no pay/no play laws will require an uninsured driver to cough up a sizable deductible in an accident before they can sue for bodily harm or property damage compensation.
  • Uninsured Driver GraphicWhen you get caught, it certainly costs to drive without insurance. Uninsured motorists also place a heavy financial burden on insured drivers to the tune of $10.8 billion per year.2 This is precisely why insurance agents recommend that all drivers carry uninsured motorist coverage to offer financial protection in an accident caused by an uninsured or underinsured driver.

This brings us to the important quetion at hand…

Do You Need Uninsured Motorist Coverage?

Very few states require drivers to purchase uninsured/underinsured motorist coverage. At the bare minimum, most insurance agents recommend carrying uninsured/underinsured motorist coverage at an amount that equals the bodily injury liability limit in a policy.

However, uninsured motorist coverage in a policy may require further tweaking since bodily injury liability limits could range from as little as $20,000 to more than $1 million. Your insurance agent can consult with you to determine the right amount of uninsured motorist coverage to protect you in an accident.

Uninsured Driver Graphic
Uninsured Driver Graphic

When you purchase uninsured motorist coverage in a policy, payment limits will match state minimum requirements without exceeding liability policy limits – in most cases. Across-the-board, uninsured motorist property damage (UMPD) coverage can’t be added on to a policy without uninsured motorist bodily injury (UMBI) coverage.

In fact, some drivers opt for uninsured motorist property damage coverage if they don’t want to pay for full-cost collision coverage. UMPD can provide a cheap way to protect a vehicle against uninsured motorists without paying a higher premium associated with collision coverage. The catch is that you have to be a careful driver because UMPD does not cover damage to your vehicle if you are at fault in an accident.

You may also be surprised to find that uninsured motorist bodily injury coverage can provide added protection outside of your vehicle.

If you’re hit by an uninsured driver as a pedestrian on a sidewalk, you can count on your UMBI policy to kick in to cover any injury expenses in the accident. In this type of scenario, UMBI protection is critical since it will compensate for lost wages and medical expenses that may not be covered by your health insurance policy. Uninsured motorist coverage will also provide added protection if you or your family are injured by an uninsured motorist when traveling as passengers in another vehicle.

Uninsured Driver Graphic

To help you make an educated decision in your auto insurance policy, you can weigh the pros and cons of buying uninsured motorist coverage:

Uninsured Motorist Coverage Pros

  • Can pay for medical bills, lost wages, and pain and suffering
  • Can cover vehicle repairs and damages
  • Can cover damage to qualifying personal items in a vehicle
  • Can offer medical coverage above health insurance limits
  • Can provide peace of mind

Uninsured Motorist Coverage Cons

  • May not be required in some states
  • Can increase monthly car insurance rates
  • May still require a court appearance for collision claims

Do you need uninsured motorist coverage? This may be one
time when the “better safe than sorry” rule applies.

If your state requires uninsured motorist coverage, such as New York, Maryland, and Illinois, that will answer the question for you. If uninsured motorist coverage remains optional in your state, you have to decide if the pros outweigh the cons and the cost of adding the coverage on to your policy.

In most cases, uninsured motorist coverage is definitely worth the expense. If you consider the financial impact and personal stress of getting into an accident with an uninsured driver, having that extra padding on your car insurance policy will give you the peace of mind you need to drive safely day after day. Uninsured motorist coverage guards against a substantial driving risk and can offer personal protection as a pedestrian or even a passenger in another vehicle.

How Much Will Uninsured Motorist Coverage Cost You?

In comparison to other coverages on your auto insurance policy, UM and UIM coverage are relatively affordable and usually represent only a small increase in premium.

As you may know by now, it is difficult to provide exact estimates for car insurance rates since they fluctuate greatly based on a number of individual factors, including age, driving history, gender, and more. Uninsured motorist coverage requirements and needs may also vary greatly by state.

Uninsured Driver Graphic

The good news is that uninsured motorist coverage is estimated at less than 10% of your annual premium, depending on your provider.


Uninsured Driver Graphic

Tacking this “extra” on to your policy may only increase monthly insurance rates minimally, while providing a large amount of added protection. Again, the exact rate for uninsured motorist coverage will depend on the policy amount for bodily injury liability coverage, which may range from $50,000 to $100,000 to $300,000 or more.

Some insurance providers estimate uninsured motorist coverage at as little as $40 per year for a $100,000 policy.

Uninsured motorist coverage will be added on to your car insurance premium. You can keep your car insurance policy, as well as any add-ons, more affordable with the following tips:

  • Compare a minimum of three insurance providers before making a final decision.
  • Consider the cost and replacement price of your vehicle before you buy.
  • Combine multiple insurance policies with one provider to reduce rates, i.e. auto, life, andhomeowner’s insurance.
Uninsured Driver Graphic
Uninsured Driver Graphic
  • Shorten your commute and/or try to drive as little as possible.
  • Consider moving to a safer area or ZIP code with lower car insurance rates.
  • Avoid tickets and other traffic offenses to improve your driving record.
  • Keep your credit rating high to lower car insurance rates accordingly.

LAST BUT NOT LEAST… Last but not least, take the time to discuss how the amount of uninsured motorist coverage you add on to your policy will impact your rates. Adding on a small amount of uninsured motorist coverage at $50,000 may cost you less than a $300,000 policy. However, it is important to understand exactly how much protection that amount of UM will provide in an accident before making a final decision.

Uninsured Driver Graphic

Getting into an accident with an uninsured motorist is never worth the risk. Understanding the benefits of uninsured motorist insurance is the first step to take to keep you and your family safe in an unexpected accident. A minimal policy add-on could mean major savings and protection if you are accidentally hit by an uninsured driver.

Reviewed by:
Licensed Insurance AgentEric Huffman

Sources:

  1. “Study: 1 in 7 Drivers Are Uninsured.” BLACKWATER INSURANCE GROUP. Web. 29 July 2013.
  2. “Beware Of Uninsured Motorists – A Look At The Uninsured – New York Motor Insurance.” Get New York Auto
    Insurance Quotes At NewYorkMotorInsurance.com. Web. 29 July 2013.
  3. The information provided is informative only and is not intended to be used for legal purposes. No one should use this information as a means to misrepresent or defraud an insurance company. If you are unclear about your insurance needs, please contact a license insurance professional for more specific direction.

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