Yes, you need Uninsurance Motorist Coverage, not by law but by principle.
Buying uninsurance motorist coverage means you are not only cautious and prepared for the unknown, but also careful not to find yourself completely overwhelmed.
So, whether or not you need to have uninsured motorist insurance depends on a few things:
- Your state
- The other types of insurance coverages you already have
- Your insurance budget
- Your insurance deductible
What Is Uninsured Motorist Coverage?
The law requires that you need to get at least the basic insurance motorist coverage for your car – liability insurance if you own or drive a vehicle. But, some states may require additional insurance coverages such as uninsured motorist coverage.
Uninsured motorist coverage (or UM) is applicable when you’re involved in an uninsured motorist accident. Essentially, UM is liability insurance but for the other driver.
Typically, when you’re involved in an accident where the other driver is at fault, you will benefit from his or her auto liability coverage to pay for your car repairs and medical bills. What would happen if the at-fault driver doesn’t have insurance coverage or has under-insurance?
Naturally, you may have to pay for those expenses out of pocket. This is where uninsured motorist (UM) coverage comes in to help. It will pay for those expenses.
If the at-fault motorist doesn’t have enough coverage to cover your expenses, it will be under-insurance. In this case, you may need to have an Underinsurance Motorist Coverage (UIM) policy to support the expenses.
What Is Underinsured Motorist Coverage
This type of policy applies when the at-fault driver has limited liability insurance. Usually, under insurance is difficult to define and depends on every state’s procedures. However, either:
- Their underinsured driver’s liability limits aren’t enough to cover your expenses after an accident, or,
- The driver’s liability limit is equal to or less than your underinsured motorist coverage limit
- The at-fault driver’s insurance company denies paying the coverage or runs out of business
Some states bundle uninsured and underinsured motorist coverages together. Insurance companies then offer them as single protection when you buy a car insurance policy. For instance, in Arizona, the law doesn’t require you to have UM/UIM coverage.
What Does Uninsured Motorist Coverage Cover?
You may get involved in an accident when the other driver is at fault. However, the other driver may have no insurance coverage, or their insurance cannot pay the full extent of the damage to your car, medical bills, or other associated costs. This where uninsured/underinsured motorist coverage comes in.
Uninsured/underinsured motorist coverage provides protection for your injuries and your passengers, including:
- Car damage
- Medical bills
- Pain and suffering compensation
- Funeral expenses (in case of death)
- Lost wages (if the accident disables you completely)
Even if uninsured motorist coverage is optional coverage in your state, it is essential to add it to your policy to cushion you and add financial protection.
Types Of Uninsured Motorist Coverage
Insurance companies often offer two types of uninsured motorist coverage:
Uninsured motorist bodily injury coverage (or UMBI)
UMBI covers medical expenses to you or your passengers when you’re involved in an accident with an uninsured driver. Insurance companies may extend this coverage to a family member who is driving your car.
The UMBI coverage includes your medical expenses and lost wages. It may also pay for rehabilitation and funeral costs (in death) for you and your passenger.
Uninsured motorist property damage coverage (UMPD)
UMPD pays for repairs to your car or property after an accident with an uninsured driver. However, this coverage is not available in all states.
Not all insurance providers and states offer both types of coverage.
Of the two types of UM coverage, UMBI is the more important since you’re likely to have other insurance coverages to protect you. Most insurance providers refer to UMPD only as “uninsured motorist insurance.”
On the other hand, underinsured motorist coverage offers on underinsured motorist bodily injury (UMBI) coverage.
Do I need Uninsured Motorist Coverage
- The answer depends.
- Is it a requirement of your state?
- Can you afford it?
- Do you need it?
- What other insurance policies do you already have?
If you already have collision insurance, you may not need uninsured motorist coverage. Usually, collision coverage protects you regardless of what happens or who is at fault. For instance, if you hit a tree, collision coverage will still cover you for the vehicle repair.
However, it is essential to purchase uninsured motorist coverage regardless of your state requirement. This is called ‘insurance on top of insurance’ and it’s a witty thing to do.
For example, it may also help you avoid a collision claim if you are involved with a hit-and-run or an underinsured driver.
Can I Stack Uninsured Motorist Coverage
If you own multiple cars, you can decide to insure all of them on your insurance policy. This gives you the option to “stack” your uninsured motorist coverage when you’re involved in an accident.
The stacked insurance claim is when you claim two uninsured motorist coverages. When you stack insurance, you will be able to get more insurance money to help you cover your medical bills in a car accident.
If you want to stack your UM insurance, you can do it in two ways:
- Stack insurance coverage for two cars insured under one policy
- Stack insurance coverage for two cars insured under two policies in your name
However, stacking is only allowed by some states. Furthermore, some insurance providers have an “anti-stacking provision,” which means you can’t make multiple UM claims for one accident.
If you stack insurance policies, your premiums may increase. If your provider allows stacking, you may need to pay more money on your policy.
How Much Uninsured Motorist Coverage Do I Need?
Assuming your state doesn’t require uninsured motorist coverage, such as Arizona. In this case, several factors will determine the amount of UM coverage you may need.
If you’re purchasing UM as an optional coverage, you should consider two important things:
The number of your state’s uninsured drivers. If you drive in a state where most drivers are uninsured, it is essential to consider buying uninsured motorist coverage.
There is no one-size-fits-all answer to how much-uninsured motorist coverage you need. It all comes down to the amount of risk you’re facing and the amount of risk willing to take. It also depends on how much you’re ready to pay out-of-pocket when you’re involved in an accident.
The bottom line is that you need uninsurance motorist coverage. If you own a vehicle, regardless of whether your state’s law requires you to have it, you can save a lot if you have it. Before you buy a policy, you need to assess your needs and budget to understand what type of policy will fit your needs. Alternatively, you can talk to your insurance agency to give you more details.