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What Is Uninsured and Underinsured Motorist Coverage?

Car insurance may be required in nearly every state – but that doesn’t mean every driver has coverage.

According to a study done in 2017, The Insurance Research Council reports that one in eight drivers lacks coverage. Some states have much higher rates for uninsured drivers – for instance, around 27 percent of Florida drivers lack insurance. Rates vary by state for many reasons, including how strict enforcement is and how stiff penalties are.

With so many drivers on the road without auto insurance… what could happen if you’re in an accident with one?

“If you’re in an accident with someone who has no insurance or not enough insurance, your only options are to look to your insurer – or to your wallet,” says Dave Freeman, vice president and regional officer at Erie Insurance.

Let’s break it down with this hypothetical example. (Spoiler alert: If you don’t have uninsured or underinsured motorist coverage… it could get expensive.)

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A Tale of Two Drivers

Let’s pretend there are two drivers in an accident – David (who’s at fault), and Katie (who’s not at fault). David smashes into Katie’s car after running a red light, which damages her vehicle and sends her to the hospital with serious injuries.

In this example, Katie does not have uninsured or underinsured motorist coverage. Here are some ways Katie, the not-at-fault driver, would be covered if she had $18,000 of car damage and $50,000 of medical bills and injuries that prevented her from working for two months.

Situation 1: David has enough coverage.

If David had $300,000 of bodily injury liability and $100,000 of property damage liability, Katie’s car damage and injuries would be fully covered. David’s bodily injury liability coverage will also reimburse Katie for the two months she couldn’t work.

Related: Understanding your auto insurance: 6 common coverages (and how they work)

Situation 2: David has the state minimum liability coverage.

 Most states require drivers to have a minimum amount of auto insurance to cover the injuries and property damage they’re responsible for. But those limits are typically low, which can leave injured, not-at-fault drivers vulnerable.

Let’s say David and Katie’s accident happened in a state with minimum liability requirements of $25,000 per individual injured in an accident and $7,500 for property damage, and David only bought the minimum coverage. If David didn’t have enough personal assets to cover the rest of Katie’s claim, she would be stuck with $25,000 in uncovered medical bills, $10,500 in uncovered car repair bills and no reimbursement for the two months she wasn’t able to work.

Related: The 5 biggest insurance mistakes people make

Situation 3: David does not have any auto insurance (or David is a hit-and-run driver). 

The only way Katie can recover any money from David is to sue him. This often doesn’t help because drivers who don’t purchase insurance or who take out a bare-bones policy usually don’t have many assets in the first place. Katie could potentially be stuck with the entire bill.

What’s a Driver to Do?

In situations two and three, Katie would greatly benefit from three coverages. They are:

  • Uninsured motorist bodily injury protection covers injuries that you and the passengers in your vehicle sustain when an uninsured (or a hit-and-run) driver is at fault. This coverage includes medical expenses, lost wages and pain and suffering. It may be mandatory, subject to waiver, in some states. New York is a no-fault state, meaning that drivers in an accident can file a claim with their insurance company regardless of who is at fault. Even still, it’s recommended to have uninsured and underinsured coverage if you live in a no-fault state.

    If Katie had this coverage in situation three, she would have received enough money to cover her hospital bill and her two months of lost wages. She would also have the option of filing a claim for her pain and suffering, up to the limit of her policy.

  • Underinsured motorist bodily injury protection covers the same things when the at-fault driver doesn’t have enough insurance to pay your bills. If Katie had this coverage in situation two, the $25,000 in medical bills that David’s policy didn’t cover would be covered up to the limits of her policy.

  • Uninsured/underinsured motorist property damage pays for your vehicle repairs or a replacement car if you’re hit by someone without any or enough insurance coverage. However, this coverage is not available in every state, including five states in Erie Insurance’s footprint: Pennsylvania, North Carolina, New York, West Virginia and Wisconsin. In those states, optional collision coverage will protect your vehicle for damage caused by a collision or upset, even when it’s caused by an uninsured or underinsured motorist. (In some cases, it makes sense to also purchase uninsured/underinsured motorist property damage, if available.) If Katie had this coverage in situations two and three, she would have had enough money for repair or replacement of her car, up to the limit on her policy… even if she had not purchased collision coverage.

It’s important to note that your health insurance policy is not a full-proof guarantee if you’re injured by an underinsured or uninsured driver. That’s because you might have a large deductible. You could also exceed your maximum limit. When you have your own coverage, you won’t have to stress about these things, or about suing an uninsured or underinsured driver to recover damages.

What Happens to Drivers Without Auto Insurance?

You may wonder why you need to insure yourself against uninsured drivers who break the law. Rest assured that anyone caught driving without insurance feels the sting. When they get caught, uninsured drivers can face some or all of these penalties (depending on state law):

  • Fines (as high as $5,000 for a subsequent offense)
  • Suspension of driver’s license
  • Points on their license
  • Traffic tickets
  • Confiscated license plates
  • Vehicle impoundment
  • Jail time

Some states also enforce “no-pay, no-play” laws that prevent uninsured drivers from collecting damages from insured drivers, or make uninsured drivers pay the equivalent of a large deductible before they can sue for property damages or bodily harm.

If you’re not sure that you’re protected against all the uninsured drivers out there, contact a local Erie Insurance agent in your community to learn about auto insurance from ERIE. He or she can tell you about available coverage options in your state that will help protect your good life.

ERIE® insurance products and services are provided by one or more of the following insurers: Erie Insurance Exchange, Erie Insurance Company, Erie Insurance Property & Casualty Company, Flagship City Insurance Company and Erie Family Life Insurance Company (home offices: Erie, Pennsylvania) or Erie Insurance Company of New York (home office: Rochester, New York).  The companies within the Erie Insurance Group are not licensed to operate in all states. Refer to the company licensure and states of operation information.

The insurance products and rates, if applicable, described in this blog are in effect as of July 2022 and may be changed at any time. 

Insurance products are subject to terms, conditions and exclusions not described in this blog. The policy contains the specific details of the coverages, terms, conditions and exclusions. 

The insurance products and services described in this blog are not offered in all states.  ERIE life insurance and annuity products are not available in New York.  ERIE Medicare supplement products are not available in the District of Columbia or New York.  ERIE long term care products are not available in the District of Columbia and New York. 

Eligibility will be determined at the time of application based upon applicable underwriting guidelines and rules in effect at that time.

Your ERIE agent can offer you practical guidance and answer questions you may have before you buy.