What is uninsured and underinsured motorist coverage?

You might see uninsured and underinsured motorist coverage on your car insurance policy, but you might not understand the difference or what your limits should be.

Additionally, these coverages vary by state. What is covered in one state might not be covered across the border.

Rural Mutual only does business in America’s Dairyland, so we’ll focus on how uninsured and underinsured coverage works in Wisconsin only.

What is uninsured motorist (UM) coverage?

Uninsured motorist (UM) coverage applies to when you, your family, and other passengers of your vehicle get hurt when hit by an uninsured motorist (someone without car insurance) or hit-and-run driver. It also provides coverage if you or your family are injured by an uninsured motorist or hit-and-run driver while walking down the street as a pedestrian.

Even though auto insurance is required in Wisconsin, 13.3% of its drivers go without it. This means if you get in an accident, there’s a one out of eight chance the other driver will be uninsured.

Uninsured motorist coverage makes sure money is available to pay for your losses that were caused by someone else.

Common examples of bodily injury losses include:

  • Broken bones
  • Nerve damage
  • Pain
  • Brain damage
  • Internal injuries

Wisconsin law requires uninsured motorist coverage with a minimum limit of $25,000 for one person and $50,000 per accident for bodily injury. You can increase your limits if you feel you need more protection.

Uninsured motorist coverage only covers bodily injury, not property damage to your vehicle. Your insurer may sue the other driver for any money the insurer pays you due to the other driver’s negligence.

What is underinsured motorist (UIM) coverage?

Whereas uninsured motorist (UIM) coverage protects you when an at-fault driver doesn’t have any insurance, underinsured motorist coverage protects you when the driver doesn’t have enough insurance to cover your injuries from a car accident.

The maximum amount payable is the difference between the at-fault driver’s limits and your UIM coverage limits. In other words, money from your carrier and their carrier will be used to recover losses up to the limits you have selected.

While underinsured motorist coverage is mandatory in about a dozen states, it’s not required in Wisconsin. Coverage is often sold with underinsured motorist coverage. If you purchase underinsured coverage, minimum coverage limits of $50,000 per person and $100,000 per accident are required.

Why isn’t property damage covered?

It exists, but not every state offers uninsured motorist property damage (UMPD) coverage. There is a lot of nuance to this coverage, so how it’s applied and what’s protected varies by state. About half the U.S. states offer it but Wisconsin isn’t one of them.

So in Wisconsin, it’s pretty simple. If an insured vehicle is damaged by an uninsured driver, or a hit and run driver, carriers use collision coverage to cover the damage once the insured pays their collision deductible. 

A carrier’s claims department would then typically attempt to recover the insured’s deductible from the uninsured driver, although this is not always successful. Filing a police report can increase the chances of recovering the deductible.

Is uninsured/underinsured motorist coverage expensive?

No. In most cases, these two coverages cost a lot less than liability, comprehensive, or collision insurance.

Five key takeaways

  1. Uninsured means no insurance, underinsured means not enough insurance.
  2. One out of eight drivers in Wisconsin are uninsured.
  3. Uninsured motorist (UM) coverage is required in Wisconsin.
  4. Underinsured motorist (UIM) coverage is not required in Wisconsin.
  5. In Wisconsin, both coverages cover bodily injury only, not property damage.

It’s best to be proactive and prepared in case the unexpected happens. If you have other questions about your car insurance, contact your local agent to learn more.