Here is a fun consequence of starting from absolute financial rock bottom and working your way up to the point where you have more to lose: you start to ask boring questions like “should I increase my automobile insurance coverage?” 

All jokes aside, uninsured motorist coverage (sometimes called uninsured and underinsured motorist coverage) is a type of insurance coverage that provides protection when you are in an accident with someone who does not have sufficient insurance coverage to cover the damage. This can be someone with no insurance or can be someone who opted for the bare minimum coverage and that amount did not cover your bills. When you are in an accident and the other driver is uninsured, underinsured, or it is a hit and run, typically this is when the insurance kicks in.

This type of insurance can be referred to by a number of names and acronyms: uninsured motorist (UIM), uninsured and underinsured are common names for it and in California, it may be called uninsured motorist coverage (UMC), which is comprised of uninsured motorist bodily injury (UMBI) and uninsured motorist property damage (UMPD). No matter what they call it, this type of insurance is absolutely worth considering if you can afford it, as it provides protection when other insurance falls short.

With at-fault insurance coverage, typically you will submit your car repair, property, and medical bills to the at-fault party’s insurance (or your own, if you have more comprehensive or umbrella coverage and you were at fault) and Those claims will be paid out, your car will be repaired, and you will return to normal. When the at-fault party’s coverage is inadequate or nonexistent, UIM insurance through your own carrier covers those bills.

In a no-fault state, such as New York, drivers who have suffered severe injuries or damage to their property that go beyond their insurance coverage limits may be entitled to sue the other driver for compensation. Obviously, lawsuits can be a major headache and can take a long time to proceed. Plus, there is no guarantee that you will ever be able to collect, even if you win in court — some people don’t have anything to collect from, Such as the driver of that 1986 Nissan Pulsar. In these severe accidents where medical injuries and car repair or replacement expenses exceed your insurance coverage, UIM coverage can act as a second layer of coverage that can get you paid faster and keep you out of court.

In the vast majority of states, this type of coverage is entirely optional. However, according to compare.com, there are few states like Colorado and Nebraska that make UIM coverage mandatory. Even where coverage is optional, read your local rules closely for more traps: in California, for instance, you can only obtain UIM coverage up to the amount of your own insurance limits. So, if you opted for lower liability coverage because you know that you are an excellent driver, you can only get UIM coverage up to your lower coverage amount, which may not be sufficient to cover your nice vehicle and medical bills when an uninsured motorist hits you and takes off.

In many states, even where a driver does have the minimum insurance required by law, that amount may be as low as $10,000 for property damage — would $10,000 cover the cost of your vehicle and any property contained within? If not, UIM coverage is worth considering. Plus consider potential medical bills and lost wages if you miss work: will these bare minimum coverage amounts make you whole there? Lastly, what if you have multiple people in the car? The medical bills could rise exponentially and, while most people have health insurance, the cost of deductibles, prescription drugs, and chiropractic care can add up quickly.

If you are strapped for cash and driving a $200 1986 Nissan Pulsar NX (Autobiographical reference? Maybe.) no judgment here – you may be struggling just to afford the legal bare minimum insurance in your state. That’s okay. Again, most of us have been there and it is understandable. That is why there is a minimum coverage amount. And quite frankly, it would probably cost you more in insurance than it would cost to replace the car, assuming the car is the only victim in an accident caused by someone else if you did opt for higher coverage levels that included UIM.

On the other hand, for those with more expensive vehicles or those who are concerned about potential medical bills, property damage, and the like, UIM coverage was tailor-made for you. You probably know someone who has been in an accident with a party who has no insurance whatsoever, or who had a less than reputable insurance company and bare minimum coverage, making getting even a tiny payout a battle – that’s why auto accident lawyers exist, after all. 

UIM coverage is one answer to these uninsured and underinsured drivers and picks up the slack where their coverage lacks – covering the expenses that stretch beyond the other party’s insurance, assuming they even have any. And an ounce of prevention in the form of insurance is worth a pound of cure, in the form of fighting to have your medical bills covered. But, if insurance has fallen short in you have been a victim in a car accident, consider speaking with an attorney about your case to see what remedies might be available in the courtroom.