What Is Underinsured Motorist Coverage and Why You Need It

The Other Driver's Insurance Might Not Be Enough

You've done everything right — you carry solid coverage, you drive safely, you follow the rules. Then someone rear-ends you at a stoplight. They have insurance, but only the state minimum: 30/60/25 in Texas. Your medical bills hit $80,000. Their insurance pays $30,000 (per-person limit). You're left with $50,000 in bills. Unless you have underinsured motorist coverage.

What UM/UIM Coverage Does

Uninsured Motorist (UM): Covers you when the at-fault driver has NO insurance.

Underinsured Motorist (UIM): Covers you when the at-fault driver has insurance, but not enough to cover your injuries or damages.

Together, they protect you from other drivers' poor insurance decisions.

What It Covers

• Your medical expenses
• Lost wages
• Pain and suffering
• Permanent injury or disability
• Funeral expenses (in fatal accidents)
• Sometimes property damage (varies by state)

What It Doesn't Cover

• Damage to the other driver's vehicle
• Your own vehicle damage (that's what collision coverage is for)
• Claims where you're at fault

The Uninsured Driver Problem

Nationally, about 14% of drivers are uninsured. In some states, it's much higher:

• Mississippi: ~29% uninsured
• Michigan: ~26% uninsured
• Tennessee: ~24% uninsured
• Texas: ~14% uninsured
• California: ~16% uninsured

Even among insured drivers, many carry only state minimums. In Texas, that's just $30,000 per person for bodily injury — nowhere near enough for a serious accident.

How UM/UIM Limits Work

Your UM/UIM limits work similarly to your liability limits. If you carry 100/300 UM/UIM:

• Up to $100,000 per person for your injuries
• Up to $300,000 per accident total

Stacking vs. Non-Stacking

Some states allow you to "stack" UM/UIM coverage across multiple vehicles:

• Stacked: If you have two cars with 100/300 UM/UIM, your effective limit is 200/600
• Non-stacked: Your limit stays at 100/300 regardless of how many vehicles you insure

Stacking is available in some states and costs slightly more, but significantly increases your protection.

Why Most People Should Carry It

1. Medical Costs Are Enormous

A helicopter ambulance ride costs $40,000-$60,000. A week in the ICU can exceed $100,000. Orthopedic surgery: $30,000-$80,000. State minimum limits evaporate instantly in a serious accident.

2. It's Surprisingly Cheap

UM/UIM coverage typically costs $50-$150 per year for 100/300 limits. Compared to what it protects against, it's one of the best values in auto insurance.

3. You Can't Control Other Drivers

You can't make other drivers carry adequate insurance. UM/UIM coverage is your hedge against their choices.

4. Hit-and-Run Accidents

If you're the victim of a hit-and-run, UM coverage typically applies since the at-fault driver is effectively uninsured (they can't be identified).

How to Choose Your UM/UIM Limits

Match Your Liability Limits

A good rule: your UM/UIM limits should equal your liability limits. If you carry 100/300 liability, carry 100/300 UM/UIM. The logic is simple — if you think $100,000 per person is the right amount of protection for others, it's the right amount for yourself too.

Consider Your Health Insurance

UM/UIM coordinates with your health insurance. If you have excellent health insurance with low out-of-pocket maximums, you might be comfortable with lower UM/UIM limits. But UM/UIM covers more than just medical bills — it also covers lost wages and pain/suffering, which health insurance doesn't.

The Bottom Line

UM/UIM coverage is the most underappreciated coverage in auto insurance. For a few dollars a month, it protects you from the 14%+ of drivers who have no insurance and the many more who carry woefully inadequate limits. If you're going to spend money on any optional auto coverage, this should be first in line.