car crash, totaled car

Uninsured motorist insurance definition (A complete guide)

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Uninsured motorist insurance definition.

If you have been driving for some time, you probably heard of someone who was hit by a driver who had no insurance coverage. According to Bankrate, there are more than 32 uninsured drivers in the USA implying that 10-14% of the drivers you met on the road today carry no insurance. 

In this article, I will cover in detail the Uninsured motorist insurance definition’ and cover everything you ever need to know about Uninsured/underinsured motorist insurance coverage.

An uninsured motorist is any driver that carries no car insurance coverage.

Therefore, Uninsured motorist insurance is the coverage you need to protect you and your car if you are hit by a driver with no car insurance coverage. 

Having defined Uninsured motorist, the underinsured motorist is any driver with insufficient car insurance coverage. You will need adequate personal insurance to protect yourself from accidents where the at-fault driver is an underinsured/uninsured motorist because such drivers are usually broke and won’t have enough cash to compensate you.

This article covers the following:

How does insurance work and why do you need it?

Insurance
How insurance works?

Assume there are 100 people in village A all owning a car. Assume a scenario that every year, one family gets involved in a car accident and it costs $20,000 for both repair costs and treatment of body injuries. 

Now let’s say the same people live in village B and after having such calamities came together and decides to help each other. Assume the leaders in village B decides that each family contributes $2000 yearly and this money be used to cover losses as a result of the accidents.

Is village A smarter than village B? which village would you rather belong to? If you chose village B, then you now understand how insurance works.

In insurance, money or resources are pooled together such that any person who is covered will be compensated and restored to his/her financial situation just before the accident/event. Each person in village B contributes just $2,000 for coverage of $20,000 yearly. Isn’t it a smart idea?

To make things even simple, Village B could decide to distribute $2,000 over 12 months and each family could end up paying around $166 monthly which is even very cheaper and more affordable. This is exactly how insurance work, and hope you grasped the whole idea.

What does underinsured motorist insurance cover?

According to the insurance information institute, there were 13.1% of uninsured drivers in the USA in 2017 and 12.6% of uninsured motorists in 2018 and 2019. According to the data available today, 1 in 8 drivers is uninsured in the united states.

The above statistics imply that you have more than 10% of getting involved in car accidents with a driver that carries no auto insurance. From the same statistics, a person who has no insurance coverage usually has insufficient money in cash to compensate you.

Yes, you are free to file lawsuits but will you squeeze water out of the stone? what if you suffered serious bodily injuries? what if your expensive car is severely damaged beyond repair? well, the simplest answer is ‘be prepared for the worst and buy uninsured motorist coverage.

Underinsured motorist insurance is a policy that protects/covers you if you are hit by another driver that carries no insurance.

The only way to prepare for this unwanted event is by paying enough personal car insurance coverage. Do not just go for your state’s minimum insurance coverage! Just buy enough coverage as long as you can afford it.

Do I need uninsured motorist coverage if I have collision and comprehensive?

Uninsured motorists cover you against drivers with no insurance coverage while collision and comprehensive covers other risks I explain below.

what is collision car insurance?

car collision, totaled car, damaged car, car accident
Car collision

In any car accident, you may be declared the at-fault driver or not. If you are the at-fault driver, you will be liable for the damages you caused to the other driver’s car, and also any bodily injuries suffered by people in the same car. If your car is damaged yet you are at fault in the accident, collision car insurance will help in repairing or replacing your car.

Just like comprehensive car insurance, collision too carries a deductible. You will be required to pay your deductible first before your company handles the remaining costs.

what is comprehensive car insurance?

Talk about car protection and many people think about car accidents. There are so many risks or unpreparedness you can insure your car against. Apart from car accident-related losses, you can insure your car against theft, fire, vandalism, extreme weather, and others.

Comprehensive coverage is the type of auto insurance that covers such non-car accident-related losses.

The only collision risks covered by comprehensive car insurance are if you hit an animal or hit a tree. So the answer is yes. You need uninsured motorist coverage even if you have personal comprehensive and collision coverages.

Underinsured motorist coverage example.

Assume that driver A has $2000 liability insurance coverage. Assume driver B has full coverage in addition to underinsured motorist coverage. If drivers A and B are involved in a car crash where driver A is the at-fault driver? then driver B is said to have been hit by an underinsured insured motorist/driver.

Assume driver B needs $5000 for car repairs and other medical bills. In a real situation, driver A’s liability should pay driver B for all repair and medical costs. In this scenario, driver B will receive $2000 from driver A’s liability and top it up with $3000 from his underinsured motorist coverage.

what is the underinsured motorist insurance coverage?

Underinsured motorist coverage is a policy a person needs to protect himself and his property (car) if he’s hit by a driver with insufficient coverage. In the above example, driver B is protected just because he carries underinsured motorist car insurance.

Is uninsured motorist insurance required by law?

I do not know where you live and I am not aware of what the law states in your country. If you live in the USA, yes uninsured motorist is mandatory in the district of Colombia and the other 20 states. Also, This coverage is optional in other states so you may decide to drop it should you have budget constraints.

States in the USA with the most uninsured drivers

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Head injuries

I already told you how 10-14% of drivers in the USA carry no insurance. The situation varies from state to state and it could be worse in a few cities and states.

States in the USA with the most uninsured drivers include Mississippi, Michigan, Tennessee, New Mexico, Washington, Florida, and others. 

According to the information insurance institute, 29.4% of drivers are uninsured in Mississippi, 25.5% in Michigan, and 23.7% in Tennessee, and the proportion of uninsured drivers in New Mexico is around 21.8%.

States in the USA with the least uninsured drivers.

From the same report, States in the USA with the least uninsured drivers include New Jersey, Massachusetts, New York, Maine, Wyoming, Pennsylvania, and many others.

The proportion of uninsured drivers in these states is as follows. New Jersey has the least number of uninsured drivers at 3.1%, followed by Massachusetts at 3.5%, New York at 4.1%, Maine at 4.9%, etc. If you are living in these states where the proportion of uninsured drivers is the least, you can consider dropping this coverage.

Uninsured/underinsured motorist insurance- what is it?

You will likely buy uninsured motorist bodily injury or uninsured motorist property damage. Uninsured motorist coverage is bundled with an underinsured policy and sold as one policy. This is because both serve 2 different but related roles.

Depending on the gravity of damages or injuries you sustained in an accident you did not cause, the at-fault driver having no insurance is more or less similar to being underinsured.

A driver who carries the minimum required liability coverage is no better than the one who is uninsured of course if the required amount of compensation is huge.

I recommend you buy sufficient Uninsured/underinsured motorist insurance to protect yourself from such drivers. You would rather file your claim against your personal coverage and let your company go after such drivers with no coverage.

Uninsured motorist property damage

If you decide to go for Uninsured motorist property damage, your coverage will include the following.

  • This policy will help to fix your damaged car.
  • If the other at-fault driver has insufficient coverage, your uninsured coverage will top up to fix your car.
  • This coverage also helps to fix damages to your home and other property.

Uninsured motorist bodily injury

This coverage typically deals with bodily injuries you could sustain in the accident if the at-fault driver has no insurance coverage. You will have the following coverage.

  • Payment for medical bills.
  • compensation for pain and suffering.
  • payment for lost wages if you cannot work due to the effects of a car accident.
  • Funeral services.

Uninsured motorist Vs underinsured motorist insurance coverages.

insurance policy
Insurance policy

I will use an example. Suppose 2 drivers A and B live in Florida. If hypothetically, the minimum required insurance coverage in Florida is 15/30/25 liability limits. 

15/30/25 liability limits can be interpreted as:

  • Up to $15,000 for one person injured.
  • Up to $30,000 if more than one person is injured and 
  • Up to $25,000 for any property damage.

If driver A decides not to buy any of the above coverages, but driver B buys just the minimum above (ie 15/30/25). Assume you are involved in a car accident where 4 people are injured and your car requires more than $20,000 for repairs. 

Which of the 2 drivers A and B do you wish to be involved with? Well, we say driver A is uninsured whereas driver B who carries the only minimum state requirement is only underinsured because the coverage he has is not sufficient enough to cover your losses.

Do I need uninsured motorist bodily injury if I have health insurance?

Uninsured motorist insurance coverage protects you, your passengers, and your car if you are involved in an accident with no insurance. Some states made it mandatory for every driver to buy it. Even if you live in a state or country where it is not mandatory, I recommend you buy it because:

  • Health insurance covers you when you suffer injuries and does not go beyond that to cover your passengers and your property (car) damaged. 
  • So while your uninsured motorist coverage covers injuries, car damage, and lost wages, your health insurance only caters to injuries.
  • Another reason why you need both coverages is that, whereas health insurance only covers you, your uninsured motorist covers you and your passengers.

You may choose to file your claims under uninsured motorists in any car accidents that involve:

  • Hit and run drivers.
  • Drivers who are under age and therefore uninsured.
  • Drivers who are driving under the influence (DUI)
  • Drivers who have absolutely no insurance.

How much-uninsured motorist coverage do I need?

liability car insurance
How much car insurance do you need?

I cannot stress enough the need for buying enough insurance coverage be it liability, comprehensive, collision, or uninsured motorist coverage. From the simple research I carried out, it is recommended you buy uninsured coverage that is equal to your liability insurance coverage.

For instance, buy $15,000 uninsured motorist coverage if you already carry $15,000 in liability coverage.

Do you need uninsured motorist coverage if you have full coverage?

In my previous articles, I already told you all that entails full car insurance coverage. In case you are visiting this site for the first time, full insurance coverage consists of the following:

All the above policies do not cover you if you are hit by an uninsured or underinsured driver. So, yes you still need this policy.

Why would you reject uninsured motorist coverage?

Some states ask insurance companies to include uninsured motorist’s insurance as mandatory in their sold policies. Though some states make this coverage mandatory, you can still reject it. Consider dropping uninsured motorist if:

  • If you need to save money and you already have full car insurance, you can decide to drop it.
  • If you live in states where a large number of drivers are insured, then dropping uninsured motorists makes sense.
  • If the policy is not mandatory in your country or state of origin, you can decide to drop it as long as you have sufficient collision coverage.
  • Dropping uninsured motorist implies that should you get hit by an uninsured driver, you will pay all expenses out of your pockets.

Uninsured motorist coverage deductible

Does uninsured motorist coverage include a deductible? Yes but it depends on where you come from. In some states, your uninsured motorist is required to carry a deductible while that’s a different case in some others.

What I also know is that only uninsured motorist property damage usually requires you to pay the deductible in those states where a deductible is needed. If you sustained bodily injuries, your uninsured motorist bodily injury treatment costs will be reimbursed without requiring you to pay a deductible.

What is a car insurance deductible?

There are insurance policies that require the policyholder (the insured) to contribute to costs towards car damage repairs or bodily injury treatment costs. You will pay that contribution (deductible) every time your file a claim following an accident that is settled.

For example, assume you bought a $20,000 collision policy and you agreed to $2,000 as your deductible. Should you file a claim after a collision accident, you will pay $2000 towards the repair of your car while your company pays $18,000.

Most deductibles are in the range of $0- $2,000 and the higher the deductible chosen, the lower the insurance price you pay. Not every insurance policy carries a deductible. You must choose a deductible as a must if you are buying comprehensive or collision car insurance policies.

What amount of deductible should you choose?

personal injuries, car accident, hit and run
Car accident injuries

The amount of money you should choose as your deductible depends on the following:

  • How old is the car you are driving? If you are driving a 10-year banger, better choose the lowest deductible because paying much more money that is higher than your car’s actual value is not a smart move.
  • How much money you can afford to pay out of your pockets? You will be asked to pay your deductible before the insurance company settles your claim after the accident.
  • What is your current income? If you choose a higher deductible your insurance rate or the price goes low, and the reverse is true for a low amount as your deductible.
  • What car insurance policies are you interested in? Liability coverage needs no deductible and the story is different from when you go for comprehensive or collision coverages. 
  • Do you own the car or not? If you leased or you are financing your car, the bank or the lessor company may make it mandatory that you buy comprehensive and collision insurance policies. Such policies of course carry deductibles.

Uninsured motorist coverage Florida 

If you are living in Florida, you are not mandated to buy uninsured motorist insurance coverage. According to data provided by Insurance Information Insititute, Florida is the 6th state with the highest number of uninsured motorists or drivers. From the same source, more than 20.4% of drivers carry no insurance in Florida.

You should definitely think about carrying uninsured motorist insurance coverage if you are living in Florida, though it is not mandatory as state law requires. If 2 out 10 drivers carry no insurance, your next car accident is highly likely to be involving an uninsured driver.

What car insurance is required in Louisiana?

Are you living in Louisiana? here is how much coverage you must buy before driving on any road. A liability car insurance worth 15/30/25 is the minimum requirement. 

15/30/25 liability insurance coverage can be interpreted as:

  • Up to $15,000 per person injured in the car accident. 
  • Up to $30,000 bodily injuries per accident ie if more than one person is injured.
  • Up to $15,000 in property damages (car damage, buildings damaged, etc)

Having such insurance coverage in Louisiana allows you to drive but what about if you are at fault in a car accident where your car is damaged too? what if the passengers in your car are injured?

How about if your car is stolen, vandalized, or if it is damaged by extreme weather conditions? All those events are not covered by liability car insurance, a reason you may consider buying full coverage car insurance.

Is Louisiana a no-fault insurance state?

12 states are no-fault insurance states in the USA. These include Florida, Hawaii, Kansas, Michigan, Minnesota, New Jersey,  Kentucky, Massachusetts, Pennsylvania, Utah, New York, and North Dakota. 

A no-fault system works on the principle that an injured person receives compensation or coverage without proving fault against the other party. Louisiana is one of the not no-fault states. If you are injured in a car accident, the at-fault driver pays for all the costs.

What are the minimum insurance requirements for Louisiana?

car damages, hit and run, car accident

Just like many states in the USA, you won’t be allowed drive in Louisiana before you buy the state’s minimum insurance coverage. The required insurance is Liability coverage, and just like in Florida, you will need to carry 15/30/25 liability limits.

If you are involved in any car crash in Louisiana and deemed the at-fault driver, $15,000 covers one person injured, $30,000 covers all people that are injured, and any property damages will be covered by $25,000. Should the money demanded by the third party exceed those limits, you will need to top it up using your own savings.

Do I need uninsured motorist coverage in Louisiana?

Though it is not mandatory to carry uninsured motorist car insurance coverage in Louisiana, insurance companies are required to include this policy in the car insurance package. It’s up to you to accept and buy it or opt-out.

According to the insurance information institute, at least 11% of drivers in Louisiana are uninsured, and in fact, ranks number 26 in states with the lowest number of uninsured drivers. Compared to states like Mississippi where 29.4% of drivers are uninsured and Michigan at 25.55%, Louisiana is far better, so dropping off uninsured motorist coverage makes sense.

Underinsured motorist coverage colorado

If you are living in Colorado, you will be required to buy 25/50/15 as your liability insurance limits. 

25/50/15 Liability limits are interpreted as:

  • Up to $25,000 for one person injured in the accident.
  • Up to $50,000 for all persons injured.
  • Up to $15,000 as property damage. 

The above information makes it clear that car insurance in Colorado is more expensive compared to Florida and Louisiana. On the other hand, uninsured motorist insurance coverage is optional in colorado so it’s up to you to buy it not depending on your insurance needs.

If you are interested in statistics, Colorado ranks number 13 in states with the lowest number of uninsured motorists with around 16.3% of drivers behind the wheel carrying no insurance. 16 drivers out of 100 being uninsured is not a small number and this is the reason you should buy the coverage.