This is the coverage that pays when the other driver is at fault and can't pay. The easiest way to see what it does is to crash three times, on paper.
The labels vary by insurer and by state, but the idea is the same everywhere: you buy, on your own policy, the coverage the at-fault driver should have had. Usually there are two halves. Uninsured motorist coverage (UM) applies when the other driver has no insurance at all. Underinsured motorist coverage (UIM) applies when they have some, but not enough for the harm they did. Each can have a bodily injury part and, in some places, a property damage part. How they're packaged, whether they're required, and how they're calculated depend on where you live and what your policy says.
Three illustrative crashes follow. Each card lists the coverages that might be involved and whether they respond. "May respond" means it depends on your state and policy wording, which is where you'd confirm.
Card 1 of 3The driver with no policy
A driver rolls through a stop sign and hits the side of your car. You and a passenger are hurt; your car needs substantial repairs. The other driver was not insured.
- no helpTheir liability coverageThere isn't any. This is the gap the rest of the card fills.
- respondsYour uninsured motorist bodily injuryPays for your and your passengers' injuries, up to your limits, as if the other driver had carried coverage.
- may respondYour uninsured motorist property damageOffered in some places and not others, often with its own deductible or cap.
- respondsYour collisionRepairs your car regardless of fault, minus your deductible.
- may respondYour PIP or medical paymentsWhere you have it, it may pay early medical bills before anything else does.
Card 2 of 3The driver who left
You come back to a parked car with a crushed rear door. Nobody was inside. No note, no witness, no plate.
- no helpTheir liability coverageUnknown driver, unknown insurer.
- may respondYour uninsured motorist property damageSome policies exclude damage by an unidentified driver, or require evidence of contact and a prompt police report. Read yours.
- respondsYour collisionUsually covers your car being struck while parked, subject to the deductible.
- no helpYour uninsured motorist bodily injuryNobody was hurt, so there is nothing for it to pay.
Card 3 of 3The driver with too little
An at-fault driver carries $40,000 of bodily injury coverage per person. Your injuries, lost wages and related costs come to $130,000. Your own underinsured motorist limit is $100,000. All figures are illustrative.
- respondsTheir liability coveragePays up to its $40,000 bodily injury limit, and then stops.
- respondsYour underinsured motorist bodily injuryPicks up after their limit is used, up to your own limit, calculated in one of the two ways shown below.
- may respondYour health insuranceMay pay medical bills along the way and then seek repayment from the settlement.
If UIM sits on topTheir policy pays $40,000. You still have $130,000 − $40,000 = $90,000 of loss, and your $100,000 limit covers all of it.40,000 + 90,000 = 130,000 paid
If UIM is reduced by what they paidYour $100,000 limit is offset by their $40,000, leaving $60,000 available. You recover $40,000 + $60,000 and are left $30,000 short.40,000 + 60,000 = 100,000 paid
What the cards add up to
Card one is the plain case, and the one the coverage is named after. Without UM bodily injury, the injuries in that crash would fall to your health insurance, whatever PIP or medical payments coverage you carry, and a lawsuit against a driver who may have nothing to collect. The car is a separate question. Collision would fix it in any case, less your deductible; UM property damage, where it exists, may cover it with a different deductible or none. Which is better depends on the terms on offer, and the options themselves differ from place to place.
Card two is where people are most often surprised. Treatment of hit-and-run damage varies a great deal. The dependable answer to an unidentified driver hitting an empty car is usually your own collision coverage. If you would rather not rely on that, read your policy's definition of an uninsured motor vehicle, which is where the rules on unidentified drivers live. Report it to police promptly either way; many policies expect it.
Card three shows why the size of the limit matters as much as having the coverage. The two calculations in the card are both real approaches, and which one applies to you is set by your state and your policy language. The practical upshot is the same under either one: the higher your own limit, the more of the gap you can close. That is why UM and UIM limits are often set to match your liability limits. The reasoning is simple symmetry: the protection you give others is a fair yardstick for the protection you'd want if the roles were reversed. Liability limits, decoded explains those three numbers.
Before you decline it
In some states the coverage is required. In others it is offered and can be turned down, sometimes only by a signed rejection form. If you have ever signed one, it may still be in force on your current policy, and your declarations page will tell you: either there is a UM/UIM line with limits, or there isn't. It is also worth checking whether your UM limits were lowered at some point to trim the premium and never raised again.
Carrying good health insurance does not make this coverage redundant. Health coverage doesn't pay lost wages or pain and suffering, and it may expect to be repaid out of any injury recovery. UM bodily injury is designed to stand in for the at-fault driver's liability coverage, which covers much more than medical bills.
If you are ever in one of these crashes, the steps at the scene and afterward are the same as any other claim, laid out in filing a claim, hour by hour. The one addition: tell your insurer early that the other driver appears uninsured or unidentified, because that is the fact that brings your own UM coverage into the claim.