Uninsured/Underinsured Motorist Coverage [How it Works and Why You Need it]

Uninsured or underinsured motorist coverage (UM/UIM) protects you financially if you're in an accident with a driver who doesn't have car insurance. Although UM/UIM coverage is typically considered optional, research shows that one in eight drivers are not insured. Uninsured/underinsured motorist coverage is broken into two parts — property damage and bodily injury. This means that insurance reimburses you for vehicle repairs or medical bills from an accident.

Free Car Insurance Comparison

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

Free Car Insurance Comparison

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

UPDATED: May 4, 2022

Advertiser Disclosure

It’s all about you. We want to help you make the right coverage choices.

Advertiser Disclosure: We strive to help you make confident car insurance decisions. Comparison shopping should be easy. We are not affiliated with any one car insurance company and cannot guarantee quotes from any single company.

Our partnerships don’t influence our content. Our opinions are our own. To compare quotes from top car companies please enter your ZIP code above to use the free quote tool. The more quotes you compare, the more chances to save.

On This Page

Table of Contents

Written By: Zaneta WoodReviewed By: Joel OhmanUPDATED: May 4, 2022Fact Checked

Worst Five States for Uninsured Drivers
RankState% of Uninsured Drivers
New Mexico421.8%
Washington State521.7%
Get Your Rates Quote Now

Compare RatesStart Now →

Owning a car comes with a lot of responsibilities. From the cost of maintenance and upkeep, to the price of fuel, and to the cost of car insurance — being a responsible car owner can add up.

But what happens if you’re involved in an accident with someone who isn’t insured? It’s simple.

Without uninsured or underinsured motorist coverage, your costs following a car accident could easily skyrocket.

Uninsured/underinsured motorist coverage (UM/UIM) is just one type of car insurance and you might be thinking, “Is it worth the cost?” Fortunately, UM/UIM doesn’t have to break the bank. In other words, you can have this coverage and still maintain cheap car insurance.

Keep reading to learn more about the “why” behind UM/UIM coverage. While you’re at it, maintain low rates by comparing car insurance quotes from different companies. Enter your ZIP code into our free online quote comparison tool and start saving today.

Table of Contents

Basics of Uninsured/Underinsured Coverage

Here’s the deal: not everyone has the same approach to car insurance.

This means the guy sitting in the car behind you at the stoplight might not have enough car insurance to pay for any damage that he might cause you and your vehicle if he rear-ends you. So you may be asking yourself, “Is uninsured/underinsured motorist coverage worth it?”

Having uninsured and underinsured motorist coverage can go a long way toward giving you peace of mind when you’re out on the open road. Keep reading to find out more.

What is the difference between uninsured and underinsured motorist coverage?

You are considered an uninsured motorist if you are operating a motor vehicle but you do not own a car insurance policy in your name, or are not covered under a car insurance policy held by someone else as the primary.

You are classified as an underinsured motorist if you do not have enough insurance coverage to compensate those who might be injured or sustain property damage if they were to be involved in a car accident with you.

Purchasing underinsured motorist coverage typically only nominally increases your policy rates, while offering you important additional protection.

This means that even if you are never involved in a car accident with an uninsured or underinsured motorist, the price you are paying to maintain this kind of coverage is well worth the price to bring yourself a little more comfort when you’re behind the wheel.

What are the types of uninsured/underinsured motorist coverage?

There are four main types of uninsured and underinsured motorist coverage, and each type covers different things, which can be categorized into two primary bins. Take a look:

Uninsured/Underinsured Motorist Bodily Injury:

  • Uninsured Motorist Bodily Injury (UM or UMBI), which covers injuries sustained by you or your passengers when you are hit by an at-fault driver who is uninsured
  • Underinsured Motorist Bodily Injury (UIM or UIMBI), which covers injuries sustained by you if you are hit by an at-fault driver, but only if the at-fault driver has insufficient insurance

Uninsured/Underinsured Motorist Property Damage: 

  • Uninsured Motorist Property Damage (UMPD), which covers damage to your vehicle if you are hit by an at-fault driver who is uninsured
  • Underinsured Motorist Property Damage (UNDPD), which covers damage to your vehicle if you are hit by an at-fault driver, but only if the at-fault driver has insufficient insurance

So how much unisured/uninsured motorist coverage do you need?

Some states require uninsured and/or underinsured motorist coverage as a part of their state minimum auto insurance coverage. However, the deductible amounts per each type of coverage may differ depending on what your state requires.

Split limit plans separate the coverage amounts coverage levels for UMBI and UMPD.

An example of this might be when your policy is written to include $50,000/$100,000/$25,000 coverage amounts, which would provide you with coverage of $50,000 per person with a maximum of $100,000 per accident for bodily injury and $25,000 for property damage claims.

Combined single limit plans are also offered in a few states and your coverage level to pay for both UMBI and UMPD.

This would mean that a $100,000 policy will pay for up to that amount of UM claims regardless of whether the claims are the result of bodily injury or property damage.

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

Full coverage car insurance policies typically bundle liability, comprehensive, and collision coverage into one purchase price.

Full coverage ensures you are protected from things like theft, flood, damage to your car if you collide with another car and that you can pay the costs for another party’s injuries and repairs if you are determined to be at-fault in a car accident.

Many people who purchase a full coverage policy do not realize that if the accident involves a person who is uninsured or underinsured, they might end up paying for the majority of the costs.

That is where uninsured and/or underinsured motorist coverage comes in.

If you live in a no-fault state (which means drivers file claims with their own insurers for any damages, injuries, etc. resulting from an accident, regardless of who is at-fault), having uninsured and/or underinsured motorist coverage could offer you an added layer of protection by covering things that the other driver’s liability policy would normally cover.

Some of these things include:

  • Lost wages
  • Pain and suffering
  • And certain types of medical bills

If you live in an at-fault or tort state (in which the at-fault driver’s insurance covers the cost of injury, damages, etc.) the chances an uninsured or underinsured motorist will be able to pay if sued are very low. In this instance having uninsured or underinsured motorist coverage could help you recoup some of your costs if you prefer not to litigate.

Am I required to carry uninsured/underinsured motorist in my state?

Each state has its own minimum requirements and many of these minimum state requirements include the compulsory purchase of uninsured and/or underinsured motorist coverage according to the Insurance Information Institute (III).

Some of the states that require the purchase of uninsured and/or underinsured coverage as part of their Automobile Financial Responsibility Laws include:

  • Connecticut
  • Maine
  • Minnesota
  • Montana
  • New York
  • North Dakota
  • South Carolina
  • Virginia
  • West Virginia
  • Wisconsin

The individual state requirements may vary (ex. in some states you may only need uninsured or underinsured coverage, while in others you may need both), so always check with your car insurance provider to make sure that you have the right amount of coverage in accordance with your state’s laws.

View as image

The best way to know for sure is to check with your agent when purchasing your policy. While most people have heard of uninsured and underinsured motorist coverage, many drivers don’t know there is a third option to protect them against loss or damage.

This type of coverage is called Supplementary Uninsured Motorist (SUM) coverage.

SUM coverage offers you protection if you are injured as a result of an accident involving an uninsured or underinsured vehicle or one involving a hit and run driver.

Keep in mind though that generally speaking, SUM coverage limits cannot be higher than the bodily injury liability limits on your policy.

Do I need uninsured/underinsured motorist coverage if my state does not require it?

Even if it’s not required, you are still permitted to purchase uninsured/underinsured motorist coverage in your state. For example, while it’s not required in either state, you can purchase uninsured/underinsured motorist coverage in California and Florida.

Knowing that UM/UIM coverage is not always required, you may be asking, why is it a good idea for you to purchase uninsured and underinsured motorist coverage?

It’s simple. There are many reasons why you should consider adding uninsured and/or underinsured coverage to your policy, regardless of where you live and your state’s insurance requirements. UM/UIM can protect you financially and is quite valuable, especially in states where the percentage of uninsured motorists is high.

View as image

One of these reasons is this:

According to the Insurance Information Institute and the Insurance Research Council (IRC), one in eight drivers is uninsured.

The reason for this according to the National Association of Insurance Commissioners (NAIC) and the IRC is that with the current economic state of the country, there are drivers who simply cannot afford to purchase insurance coverage.

This collective opting out of the purchasing car insurance by Americans in order to pay the day-to-day bills is the reason why the percentage of uninsured drivers in the United States has been rising since 2010 when it was at an all-time low of 12.3 percent.

Our study covering facts about uninsured motorists found that the percentage of drivers per state who don’t have insurance ranges from 3% to 29%. Check out how your state compares in the table below.

The Worst (and Best) States for Uninsured Motorists
RankStateLicensed DriversUninsured MotoristsPortion of Drivers Uninsured
4New Mexico2,153,929469,55721.8%
10Rhode Island7,261,2661,198,10916.5%
20North Dakota4,950,056643,50713.0%
27South Carolina1,430,818155,95910.9%
35West Virginia8,032,7927,390,1699.2%
40North Carolina3,877,9682,869,6967.4%
40South Dakota638,428472,4377.4%
44New Hampshire2,121,0991,293,8706.1%
48New York1,130,389463,4604.1%
50New Jersey424,115131,4763.1%
Get Your Rates Quote Now

Compare RatesStart Now →

If you live in one of the states with the highest percentage of uninsured motorists then it is definitely worth adding uninsured, underinsured, or even SUM coverage to your policy.

Adding uninsured and/or underinsured motorists coverage to your policy is also a wise investment no matter which state you live in, given that every state has some number of uninsured or underinsured drivers on the road.

In order to combat the growing number of uninsured or underinsured drivers on the road, some states have begun requiring proof of insurance when you register your vehicle.

Other states have stiff penalties for driving without car insurance as well, and 10 states have enacted “No Pay, No Play” Laws, which have reduced uninsured rates an average of 1.6 percent overall.

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

secured lock Secured with SHA-256 Encryption

Best Car Insurance Companies for Uninsured/Underinsured Motorist Coverage

So just who are the best auto insurance companies when it comes to purchasing uninsured/underinsured motorist coverage?

The answer depends on a lot of factors such as the loss ratio and market share of each company in your state.

These are extraneous factors that can drive the price of your car insurance policy up or down depending on various market forces, which is why it is so important to shop around.

Getting the best deal on uninsured/underinsured motorist coverage means doing your research before you make your purchase, which is where we come in. Keep reading to find out more.

How do I understand my uninsured/underinsured coverage?

If you have ever been involved in a car accident that involves an uninsured or underinsured driver then you know that there is a lot of ambiguity involved in the claims process.

You can minimize some of your headaches by understanding just what uninsured and/or underinsured motorist coverage will pay for.

How does uninsured/underinsured motorist coverage work?

Depending on the amount and type of coverage that you purchase, uninsured/underinsured motorist can cover everything from bodily injury and property damage inflicted on you or your passengers by an uninsured or underinsured driver, to lost wages and pain and suffering payments for everything that you have been through.

This added layer of protection can also remove a lot of the financial uncertainty that can go along with being hit by an uninsured or underinsured driver because this type of coverage adds a buffer between the bills that might be piling up courtesy of the car accident and the everyday bills that need to get paid.

How do I save when purchasing uninsured/underinsured coverage?

Car insurance policies are sold using the same principles of supply and demand that drive the prices of other consumer goods.

This means that just like when looking around for the best deal on that fancy set of shoes you have had your eye on, how you shop for car insurance, including for uninsured and/or underinsured motorist coverage really can help you get the best price.

Asking a licensed insurance agent about any other car insurance discounts that you might be eligible for can also help to offset the cost of adding uninsured/underinsured motorist coverage to your policy.

Some of these other discounts might include:

You will never know just how much money you can save if you don’t ask your agent when you’re purchasing a car insurance policy.

Looking to keep the purchase of your car insurance policy completely online?  There might be an online shopper discount available to you as well so be sure to read the fine print.

What is policy stacking?

Nowadays it seems that everyone has heard of the term “bundling” when purchasing insurance. Bundling is not the same as policy stacking though. When you bundle, you are combining several types of insurance, such as home and auto, into one policy to save yourself a few dollars.

Is car insurance stacking worth it? It has to do with the claims side of car insurance, and that can lead to a truckload of legal trouble in some states where policy stacking is against the law.

So what is policy stacking exactly?

The International Risk Management Institute (IRMI) defines policy stacking as:

The application of two or more policies’ limits to a single occurrence or claim.

Simply stated, this means using two policies to get a higher amount of coverage for the same claim. The pros of policy stacking are obvious because it means getting more money to pay for the cost of a single incident than you might otherwise get.

Policy stacking is also advantageous for families who live in a state that does not prohibit it and who own more than one car because, as the Insurance Information Institute points out:

In states where stacking is not specifically prohibited, liability limits under the uninsured motorist coverage may be multiplied by the number of cars insured under a single policy or may be added together where multiple vehicles are insured under different policies.

Thus, in a three-car family, where uninsured motorist liability limits are $20,000, in a state that does not prohibit stacking, the amount available to pay a claim in an accident with an uninsured driver would be $60,000.

The cons of policy stacking are a lot more complicated. One of the most common disadvantages of policy stacking is that you will most likely end up paying more for your uninsured/underinsured motorist coverage in order to get a little more protection.

Policy stacking could also tangle you up in some legal maneuvering because, like in North Carolina, not all states permit it.

In fact, The American Property Casualty Insurance Association (APCIA) lists around 30 states that have statutes, rules, and/or case law that do not specifically allow for policy stacking making it one of the more ambiguous aspects of purchasing a car insurance policy.

States are not the only ones who might have anti-stacking provisions or clauses. Some insurance providers also prohibit the practice.

So how do you get the most for your money when purchasing uninsured and/or underinsured motorist coverage and still stay out of legal trouble in the process?

The best way is to do your research on your state’s policy stacking legislation, check with your state’s insurance regulator, and ask an insurance agent for clarity before purchasing your car insurance policy.

Being a well-informed consumer can help you negotiate the best price for your car insurance policy while ensuring that you are in compliance with any anti-stacking provisions that you state might have enacted.

Filing an Insurance Claim Against an Uninsured Motorist

Being involved in a car accident with another driver who has car insurance is scary enough, but finding out that the driver who hit you doesn’t have insurance can be terrifying.

Your head immediately becomes overwhelmed with questions like who is going to pay for all of the damages and just who is responsible for that astronomical ambulance bill that is surely headed your way.

Having uninsured and/or underinsured motorist coverage can remove some of this fear, but only if you know how to properly file your claim. That’s why we’re here.

Keep reading to find out some simple tips that can make maneuvering the claims process a lot easier.

How do uninsured motorist claims work?

When you file an uninsured/underinsured motorist claim you are essentially filing a claim against your own car insurance.

If the other driver is uninsured or underinsured it’s important that you give your car insurance provider notice of the incident as soon as possible.

You can do this by visiting your agent in the office, calling the number that is provided on the back of your car insurance ID card, or logging onto the website of your car insurance provider and beginning the claims process.

Some providers have strict deadlines concerning the time that you have to report a claim, and statues generally begin to run from the day of the accident, so time is of the essence.

Your car insurance provider will ask you for any car insurance policy information that you and/or law enforcement were able to collect from the other driver while at the scene so be sure to have that handy when you contact them.

If you were unable to collect the information or you have discovered that the other driver was uninsured, be sure to make that clear to your agent because it may change how your claim is handled.

Don’t feel bad if you don’t know right away that the person that hit you was uninsured. According to All Law:

You usually are not going to know right away that you are going to have an underinsured driver claim until your medical treatment progresses and you and your lawyer get a better understanding of the value of your car accident case.

This is because it is usually at this stage that you, your car insurance agent and your attorney (if you chose to employ one) have been able to work together to gather all of the relevant facts to sort through your claim.

This means that uninsured/underinsured claims will usually take longer to process and uninsured/underinsured motorist coverage settlements may take longer to be resolved than ones that involve just your liability, comprehensive, or collision coverage.

Be aware that what you do immediately after the car accident occurs could also determine how long your case takes to process out.

What do I do immediately after an accident?

As stated above, you should always notify your car insurance provider as soon as possible. There are a few things that usually come before this step though.

One of the most important things that you can do is to get law enforcement involved.

States like Florida do not require that you call law enforcement in the case of all traffic incidents, but involving law enforcement even for something minor like a dented bumper gives you an official record of the incident to take to your car insurance provider, attorney, and even the court if it comes to that.

Once you have an official record of the incident, law enforcement will give you an incident report number to use as a means for finding their report of the accident once they’ve filed it.

When you call your agent or contact your car insurance provider, you should have your policy information on hand as well as the incident number and any other relevant facts you were able to collect at the scene.

These facts might include:

  • The other driver’s license plate number
  • The driver’s license number of the other driver
  • The car insurance policy information from the other driver
  • Any other relevant paperwork such as your driver’s license number, your license plate number, and even your health insurance information.

You should also keep in mind that you are not just an eye-witness in your case; you are also the lead investigator.  This means that you should collect as many facts as you can while at the scene of the accident and before contacting your car insurance provider.

It also means knowing what not to say or do after an accident.

Some of these don’ts include:

  • Leaving the scene
  • Choosing not to call law enforcement
  • Losing your temper
  • Admitting fault with statements such as “I didn’t even see you”

And you should never speak to the other driver’s insurance company or lawyer without your agent present or without a lawyer of your own.

You pay good money for your premiums so why not leave the negotiating to the professionals?

Will my health insurance cover me in a car accident with an uninsured driver?

A lot of people assume that if they have full coverage and they have good health insurance then they are fully covered in case of an accident with an uninsured or underinsured driver. You may be asking yourself, “do I need uninsured motorist coverage if I have health insurance?” or, “do I need uninsured motorist coverage if I have medicare?”

The reality is that things are not that simple because full coverage does not usually expressly include uninsured and/or underinsured motorist. So what happens if you don’t have uninsured/underinsured motorist coverage?

In some states, your health insurance might not pick up the difference between where your car insurance stops and the remaining bills start either.

How do you know if your full coverage policy covers you if you are struck by an uninsured and/or underinsured motorist? Just ask your agent while you are purchasing your car insurance policy.

How do you find out if your health insurance will cover the difference that your car insurance might leave behind?

You can find out by contacting your state’s insurance regulator, researching your state’s laws on using your health insurance after a car accident, and by contacting your health insurance provider directly to ask.

Some of the things that health insurance might help you pay for if your state does not have statues and laws that prohibit it could be:

  • Ambulance rides
  • Medical exams
  • Medical tests
  • Other medical treatment services that fall within the scope of your health insurance coverage

Never assume that your health insurance will make up for a gap in car insurance coverage.  Instead, it is better to just play it safe and purchase supplemental coverage like uninsured and.or underinsured motorist coverage so that you know no matter what comes your way you are covered.

Won’t the other types of coverage on my car insurance policy cover an uninsured motorist claim?

Do you need uninsured/underinsured motorist coverage if you have collision and comprehensive? What happens if I reject uninsured motorist coverage? Each component of your car insurance coverage is designed to pay out claims based on a specific set of circumstances.

This means that the liability, collision, comprehensive, and personal injury (PIP) components of your policy are not designed to pay out specifically if you are struck by an uninsured or underinsured motorist.

Liability coverage insurance will pay out up to your deductible limits if you are rear-ended by an uninsured/underinsured driver, but if the damages and bodily injury amounts exceed that deductible amount you will be stuck paying the difference if you don’t have uninsured/underinsured motorist.

Collision coverage works in much the same way whereas comprehensive only covers damages sustained by things such as falling objects, theft, acts of God or vandalism.

Personal Injury Protection (PIP) Insurance, which is required in states like Florida, specifically covers medical payments and in some cases lost wages. Watch this video for more on PIP and

Disability insurance can also help you bridge some of the gap in income left between what your PIP coverage has paid out for lost wages and what you still need to pay your day-to-day bills.

As anyone who has been involved in an accident knows though, the claims process can take a while and the bills can pile up quickly which is why having the extra layer of protection offered by uninsured/underinsure motorist coverage is comforting.

Will my car insurance rates go up if I file an uninsured/underinsured motorist claim?

The first thing that many people worry about after they find out that they have been struck by an uninsured/underinsured driver is whether or not their premiums will go up if they file a claim against their insurance company to recoup some of the costs.

This is understandable considering that it can be very frustrating to realize that you did nothing wrong yet you are the one left holding the financial bag.

If you live in California, Proposition 103 ensures your premiums won’t increase if you are forced to file an uninsured/underinsured motorist claim.

The answer is not as clear in many other states though.

Florida also has laws that prohibit insurance companies from raising your rates if you file an uninsured/underinsured motorist claim but your insurance provider can raise your rates by removing many of the discounts that you may have enjoyed prior to the accident, which will cause you to see a rate increase.

Some of the differences between how states handle uninsured motorist claims and how filing a claim will impact your rates have to do with the differences between how no-fault and at-fault states handle car insurance claims in general.

If you live in a no-fault state like Florida you are automatically filing any claim against your own car insurance provider regardless of the type of coverage you have.

Living in an at-fault state like California though means that all claims are filed against the driver who is deemed to be at fault for the accident.

So how do you find out how filing an uninsured/underinsured motorist claim will impact your premiums regardless of which type of state you live in?  The best advice is to ask your agent.

If your agent won’t give you a straight answer on the matter, then it is a good idea to begin shopping around for another car insurance provider.

Never deny yourself your right to file an uninsured/underinsured motorist claim just because you are afraid that your premiums might go up. You have paid into that coverage just in case of such an event so you have earned the right to recoup your investment should you be struck by an uninsured/underinsured driver.

Should I handle my own claim?

There are several pros and cons to handling your own uninsured/underinsured motorist claim.

The biggest pro is that you will not have to pay attorney fees or extra charges for filing fees with the courts or various other legal entities that you might encounter throughout the claims process.

The biggest con is that there may be loopholes in the law or filing deadlines that you might not be aware of that could cause your claim to be denied.

For this reason, if you do choose to handle your own claim it is always a good idea to research the various laws in your state and get familiar with the terminology that insurance professionals use before moving too far forward with the claims process.

Filing a claim against your uninsured/underinsured motorist coverage means understanding that in some instances you may be forced to sue in order to recoup your losses. It also means obtaining and retaining a copy of your settlement report.

A settlement report lists all of the aspects of the settlement and finalizes the deposit of any funds agreed upon in the settlement between you and the offending party.

If you aren’t fully versed in the law or legal and insurance jargon, some of the things on this report could confuse you and slow down the process. This is why handling your own uninsured/underinsured motorist claim can be frustrating and time-consuming, causing many people to choose to employ legal representation.

When should I seek the help of an attorney?

Filing your own claim might help you save a few dollars in lawyers’ fees, but it could also cost you thousands of dollars in missed opportunities to maximize your claim. This is especially true if you are a pedestrian or bicyclist who has been struck by an uninsured/underinsured motorist.

Many people don’t realize their car insurance can help them pay their bills if they are involved in a car accident, even if they aren’t riding in or driving a car. Personal injury and uninsured motorist attorneys do, which is why it is sometimes best to leave things to the professionals.

If you chose to hand things over to an attorney you should consider their specialized focus. Personal injury attorneys, for example, specialize in the laws and insurance coverage types that handle personal injury claims. If you are dealing with an uninsured/underinsured motorist claim, it might be best to seek out an attorney that specializes in that area.

Uninsured/underinsured motorist attorneys understand all of the nuances of uninsured/underinsured motorist claims laws in your state, which enables them to maximize your compensation amounts.

Personal injury attorneys have a broader base of knowledge thanks to years spent litigating various types of insurance claims that may or may not have included uninsured/underinsured motorist ones.

A list of questions that you should ask any potential legal representation might include:

  • How many uninsured/underinsured motorist claims have you handled?
  • How many years have you been in practice?
  • How many car insurance claims have you litigated in court?
  • What is your average rate of settlement?
  • How often and by what means do you communicate with clients?

Given the length of time that you might be forced to do business with your attorney, consider picking someone you get along with. You should also ask to meet his or her paralegal and find out about their experience and personality as well since the paralegal is often the go-between for an attorney and his or her client.

Referrals from friends and family are also a good idea before you make your final decision.

The Dangers of Driving Uninsured

You should always strive to maintain your car insurance coverage. Life happens though and sometimes the payment arrives a day late, causing a lapse in car insurance coverage.

There are also other cases where you thought that you had the right amount of coverage or enough coverage only to find out the hard way that you misunderstood something when purchasing your policy.

Whatever the case may be, if you find yourself in a car accident as an uninsured or underinsured motorist there are a few things you should know. Keep reading to find out more.

What are “No Pay, No Play” laws?

If you find that you are the one who is uninsured or underinsured in a motor vehicle accident, you should find out if your state has enacted “No Pay, No Play” laws.

Some of these states currently include:

  • Alaska
  • California
  • Iowa
  • Kansas
  • Louisiana
  • Michigan
  • New Jersey
  • North Dakota
  • Oklahoma
  • Oregon

“No Pay, No Play” laws are statutes that are intended to enforce the compulsory insurance laws that have been put in place in almost all states as a means for reducing the number of uninsured drivers on the road.

Essentially, these laws bar uninsured drivers from the ability to be compensated for damages when they’re in an accident with a driver who is adequately insured, among other claims-related benefits.

This means if you ‘re an uninsured driver who has been involved in an accident in one of the states that have “No Pay, No Play” laws in effect then you are responsible for taking care of your own expenses in most cases.

A notable exception is in the state of California, whose “No Pay, No Play” laws work in conjunction with the laws that penalize drivers who are under the influence. When this happens, if the insured driver in the accident was driving under the influence, the uninsured driver can recover certain kinds of damages.

Additionally, under most “No Pay, No Play” laws, in the event of an accident, uninsured drivers are unable to receive various kinds of compensation, and in order to sue for the damages they are able to collect, uninsured drivers are typically required to pay a high deductible (often $10,000).

This is often more expensive than if you had just maintained proper coverage amounts according to your state’s minimum coverage amount mandates so why take the risk by driving without insurance or without enough coverage?

If you are one of the many people who have accidentally let your policy lapse or simply didn’t ask the right questions before purchasing your policy, there are a few terms you should become familiar with immediately after you have been involved in an accident.

Some of these terms include:

  • Negligence Laws – These are laws that apply to cases where a person has been deemed to have acted in a negligent (or careless) manner, which results in the loss of property or the infliction of injuries to another person.
  • Contributory Negligence – This term refers to how attorneys and insurance companies conduct a post-accident investigations to determine who is at fault for the accident.
  • Comparative Negligence – This type of negligence seeks to determine how much of each party’s carelessness contributed to the accident.

Knowing who was at fault in an accident, and to what degree each party’s actions contributed to the accident, allows attorneys and car insurance provider to determine who should pay for the claims that result from the incident.

Does my state have comparative negligence laws?

Comparative negligence laws work on the theory that the amount of compensation you will receive for damages and injuries sustained by you as the result of an accident will depend on the degree to which you contributed to the accident in states with comparative negligence laws in place.

Some of the states who use contributory negligence laws include:

  • Alabama
  • Maryland
  • North Carolina
  • Virginia

The ways each of these states have designed these laws are unique to the specific demands presented by their citizens. This is why states such as Florida, Mississippi, New York, and Rhode Island use comparative fault rather than comparative negligence.

View as image

Arkansas is unique as well because it uses a modified comparative fault formula with a 50 percent bar (meaning comparative fault only applies when the driver in question is less than 50 percent at fault).

All of this can get pretty confusing so it is always best to ask your agent which type of state you live in and how it determines negligence.

What are “offset” vs. “excess” coverage limits?

In some states, you are offered an option when it comes to carrying uninsured and/or underinsured motorist coverage. In these instances, you can choose to carry “offset” or “excess” uninsured/underinsured motorist coverage when you first sit down to write your policy.

If you choose the “offset” option your insurance company may have a clause that allows them to reduce (or offset) the payout amount by any amount that is recovered from the other driver’s liability policy.

An example of this might be if you have $20,000 in medical bills and the other driver only pays for $10,000 of them then your insurance provider will offset the payout and only handle the difference.

Excess coverage works slightly differently. In states that consider uninsured/underinsured motorist coverage as “excess” coverage, your payout limits will no be reduced (aka offset) by anything that the other driver covers.

This means that if you have $35,000 worth of damages and the other insurer pays for $20,000 of them you will receive $15,000 from your uninsured/underinsured motorist coverage if you have it in the amount of $20,000.

Why? Because the total amount of coverage possible is $40,000, the damages were for $35,000, and the other driver paid out $20,000 leaving a $15,000 difference in coverage still allowed to be paid out.

What are the penalties for driving without insurance?

The penalties for driving without insurance vary by state.

In Alabama, for instance, you can be fined up to $500 and face a registration suspension with a $200 reinstatement fee attached to it for your first offense.

On the other hand, Colorado imposes a minimum $500 fine for your first offense and attaches four points to your driver’s license. Your driver’s license will also be suspended until you can demonstrate proof of insurance coverage.

Colorado courts can also add up to 40 hours of community service if you choose to drive without insurance so it’s always best to maintain proper coverage.

What is a bad faith claim?

Filing a claim with your insurance company you assume that they are negotiating in good faith.

This means that you assume your insurance provider is acting in an honest fashion and they are not attempting to mislead you in any way while you attempt to reach a settlement.

As the insured, you must also act responsibly in the situation which means you are disclosing all pertinent information to your insurance company along the way.

If there is a breakdown in the honest and open communication between you and your insurance provider then it is most likely because one of you is considered to be acting in bad faith.

If you are the one considered to be acting in bad faith, your insurance provider has their own legal recourse and actions they can take, which can even result in fraud charges in some instances.

If, however, you believe your insurance provider is the one acting in bad faith, you can file a complaint against them with your state’s insurance regulator or commissioner.

Bad faith claims are serious business no matter who is filing them so always make sure that it wasn’t just a miscommunication between you and your car insurance provider before pursuing this course of action.

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

secured lock Secured with SHA-256 Encryption

Frequently Asked Questions: Uninsured Motorist Coverage

Have a question about UM/UIM? We’ve got answers.

#1 – Where can I purchase uninsured/underinsured motorist coverage?

Most insurance companies offer this coverage, particularly if it is required in your state. If you don’t already have the coverage, you can speak with your insurance agent about purchasing it. For example, you can purchase uninsured/underinsured motorist coverage from State Farm, if you’re already covered by them, and simply add it to your existing policy.

#2 – Can I drive an uninsured car on my insurance policy?

An auto insurance policy is full of different terms. The terms must be understood if you really want to translate the language of the policy.

One of the terms that’s defined thoroughly is covered autos. As you might assume, a covered auto is a listed vehicle that’s stated on a declarations page for auto insurance, but that’s not all your policy covers.

Under the provisions of a Personal Auto Policy, there’s coverage provided for owned vehicles and other private passenger cars that meet certain conditions.

Here are some of the unlisted cars that your policy will cover you driving:

  • Newly acquired vehicles purchased after the policy begins
  • Replacement vehicle that is replacing one of the vehicles listed on the policy
  • Rental cars
  • Temporary substitute autos used when your car is being repaired, serviced, or stored because of a breakdown or loss
  • Trailers owned by the named insured that can be driven or towed on public roads

As you can see, an auto policy provides a lot more coverage than you might initially think.

Definitions help you to understand policy provisions, but they don’t necessarily help you solve the biggest riddle in the insurance marketplace: Does insurance follow the car or the driver?

It’s a difficult question to answer simply because insurance can follow the car, the driver, or both depending on the scenario.

Your insurance works very differently if you have a liability loss as opposed to a physical damage loss.

You have to understand how coverage works to fully understand if your coverage is going to kick in when you

We’ve given you a lot to consider as you begin to discuss the types of coverage that you want to be added to your policy with your agent.

#3 – What if an uninsured friend wrecks my car?

Listed and Permissive Drivers

When you purchase your car insurance policy, be sure to list all of the following drivers:

  • Everyone in your household
  • Anyone you expect to use your vehicle regularly

You must list those in your household as drivers on your policy if they’re going to be using the car. If a dependent is not yet driving at the time when you are buying the policy, it is imperative that you add them to your policy immediately when they begin driving.

If you fail to put your teenager on your policy and they get into an accident while driving your car, your insurance company will not cover any of the damages because they lives in your home and should have been listed as a driver.

Some policies have restrictions for who is considered a “permissive user,” so make sure you review those to be sure your friend will be covered should they cause an accident.

You do not have to add specific drivers to your policy just to let them drive it on occasion. However, it’s a good idea to make sure they meet the requirements listed in your policy.

If you are unsure, call your agent and confirm it. This way, even if there is an accident, you can rest assured that your insurance policy will cover it.

Your rates will go up, but at least you will have financial protection.

Illegal Drivers

If someone takes your car without your permission or your car is stolen, file a police report immediately and then promptly notify your insurance company.

If there is no legal record of your car being stolen and your car becomes involved in an accident during that time frame, you could still be held responsible for damages even though the person driving your car did not have your permission to do so.

Uninsured Drivers

In most states, you are not allowed to register a car unless you can prove you have valid insurance for it. However, you do not need to purchase car insurance in order to be licensed to drive. If you do not have a car, you probably don’t have car insurance. Not having a car and car insurance means that you can be a legally licensed driver but not be insured.

If you drive someone else’s car, you will most likely be covered under that person’s car insurance.

As the driver of someone else’s car, you should confirm the car is insured before you drive it since you could also be held responsible as the driver, especially if the car is not insured for the minimum requirements.

If you’re the car owner and are considering letting an uninsured driver borrow your vehicle, just keep in mind that if they get in an accident, your insurance will be primary, and will be the only option.

If your uninsured friend actually had insurance, in circumstances where the cost of the accident exceeded your policy limits, their insurance coverage would act as secondary protection.

Keep in mind, Uninsured/Underinsured Motorist Coverage does not apply to an uninsured driver driving an insured car. It covers your loss when an uninsured vehicle’s driver causes an accident with your vehicle.

This type of insurance only protects the insured victim of the accident, so if you are the uninsured or underinsured motorist and you are at fault for the accident, you will not receive any insurance benefits.

#4 – How can I report someone driving without insurance?

You can report someone driving without car insurance to the police, but that may not do very much good. Unless there is an imminent threat to public safety, the police have more pressing issues to deal with.

You can contact your local DMV (department of motor vehicles) to find out the procedure, but most DMVs have some sort of internal system to check or notify motorists about having a lapse in coverage or no insurance.

So, although your state may have hotlines, processes, or other departments to contact in the case of an uninsured driver, it most likely already knows this individual does not have insurance.

If someone doesn’t have car insurance and they cause an accident, they can be sued for damages. In a no-fault state, you can sue for damages above and beyond what your insurance policy covers.

#5 – Shouldn’t the state already know that someone is driving without car insurance?

While every state has a system in place to catch uninsured drivers, they aren’t perfect. Some states have gone to a completely computerized system that allows them to be immediately notified if a driver has allowed their car insurance to lapse.

In many states, however, state systems aren’t computerized and it can take up to 90 days for any action to be taken.

In general, when you register a vehicle, you must provide proof of car insurance. The insurance company from which you buy your insurance provides you with that proof and you present that information to the appropriate department for your state.

If, however, the insurance provider lets your policy lapse for non-payment or you cancel your policy, the insurance company informs the DMV, registration office, or insurance department, whichever is appropriate.

If you live in a state that has everything set up electronically, then this information is forwarded immediately. If not, then the insurance company sends out a letter.

When the system isn’t computerized, it can take up to 10 days for a letter to be sent out. Then, an actual person has to open that letter and input the information into the computer.

At that time, a letter is generated by the computer letting the person with the lapsed insurance know they have a certain number of days to provide proof of insurance.

While the computerized set-up takes less time, it can still take up to 30 days for them to notify someone of their non-compliance with insurance laws. What’s more, no one is going to come to their home and force them to go buy insurance or arrest them.

In many states, UM/UIM coverage is mandatory. But even if it is not required in your state, you might seriously consider getting it to protect you financially.

As you have seen, negotiating uninsured/underinsured motorist claims can be tricky.

You also found out that the extra few dollars that you pay for this type of coverage can really be worth the investment if you are ever involved in a car accident with someone who is either uninsured or underinsured.

Having the proper insurance coverage amounts and maintaining them consistently does not just save you from headaches later.

Maintaining proper coverage saves everyone money because it cuts down on the overhead for insurance companies, which translates to their ability to offer lower rates to all of their customers.

The National Association of Insurance Commissioners (NAIC) underscored this idea with its statement that:

Paying for those that choose fiscal irresponsibility is a problem for those that abide by compulsory insurance laws. The costs are passed along to the law-abiding public in the form of uninsured motorists coverage.

Thus, in addition to paying for their own actions, each insured motorist also pays for a portion of the costs for others that choose to disobey the law.

The bottom line? It’s best to maintain your policy at all times and double-check that you have the proper coverage amounts each time you rewrite it when your term limits expire.

But don’t stop with UM/UIM coverage. Shop affordable car insurance rates by entering your ZIP code into our free quote tool to compare insurance coverage today.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about auto insurance. Our goal is to be an objective, third-party resource for everything auto insurance related. We update our site regularly, and all content is reviewed by auto insurance experts.

Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

Full Bio →

Written by Zaneta Wood
Team Writer Zaneta Wood

Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

Full Bio →

Reviewed by Joel Ohman
Founder & CFP® Joel Ohman

Free Car Insurance Comparison

Enter your ZIP code below to view companies that have cheap car insurance rates.

secured lock Secured with SHA-256 Encryption

Uninsured Motorist Coverage Requirements by State
States with the Most Uninsured Drivers
State Negligence Laws
Uninsured Motorist Coverage Requirements by State
States with the Most Uninsured Drivers
State Negligence Laws