Uninsured Motorist Coverage will pay for your injury, and in some jurisdictions your vehicle damage, if the at-fault driver in a car accident does not have auto liability insurance or cannot be identified after a hit and run. Underinsured Motorist Coverage will step into place when the limit of liability established by the responsible party is less than what would be needed to fully compensate you for your loss. These two types of coverage are added to your own automobile insurance policy. Therefore you file a claim with your own carrier rather than attempt to collect from the other party that may not have assets to pursue. The premium is small next to what it protects, and in most states you must sign a written waiver to have it removed.
In the Insurance Research Council's 2025 study titled "Uninsured and Underinsured Motorists: 2017 to 2023," 15.4 percent of all U.S. drivers were reported as being uninsured in 2023 (more than one in seven) and one in three drivers were either uninsured or underinsured.[1] Here is how this coverage works, both personally and commercially.
Uninsured Motorist Coverage
Uninsured motorist coverage is first-party auto insurance that pays for bodily injury, and sometimes vehicle damage, caused by an at-fault driver who carries no liability insurance or flees the scene. It substitutes your own insurer for the missing one, up to the UM limit you purchased.
What Is Uninsured Motorist Coverage?
Uninsured Motorists (UM) coverage is a "first party" coverage under your own automobile policy. This coverage will step into the shoes of the liability coverage the at fault driver should have had. Therefore, if you are involved in an injury-causing collision with an uninsured motorist, your UM coverage will pay what their liability coverage would have paid for your injuries including: all your reasonable and necessary medical expenses, lost income and other general damages for the extent of your personal injuries up to your UM coverage limits. If a driver has UM limits set as 100/300 he/she could receive up to $100,000 for each injured person and up to $300,000 for all injured persons from his/her own carrier for one crash. In addition, this coverage will also apply in cases where the at fault driver's liability carrier either refuses to provide coverage or goes bankrupt, and in most jurisdictions when a hit-and-run driver cannot be identified.
Because you are the claimant against your own carrier, disputes typically go to arbitration rather than a lawsuit against a phantom driver. UM coverage generally follows people rather than vehicles, so it covers you and resident family members as pedestrians, cyclists, and passengers in other cars.
What Is the Difference Between UM Bodily Injury and UM Property Damage?
The uninsured motorist policy has two separate coverages you can buy individually: Bodily Injury means your injuries, and Property Damage refers to your vehicle. The Uninsured Motorist Bodily Injury (UMBI) coverage will pay for damages to yourself and your passengers. State laws regulate the UMBI. The Uninsured Motorist Property Damage (UMPD) will provide compensation to repair or replace your vehicle. It generally includes a cap, a deductible or some form of identification requirement which do not exist in the UMBI. Purchasers most often confuse the two types of UM.
If you are paying a Collision Coverage on your vehicle, UMPD will add very little value as this type of coverage will pay for damage to your vehicle regardless of who was at fault. The real premium value for UMPD comes from those without Collision Coverage or from states with laws requiring UMPD to cover your collision deductible if another party (who has no insurance) hits your vehicle. This is how each part works together and what you should be looking out for:
| Coverage | What it pays | Watch for |
|---|---|---|
| UM bodily injury | Medical bills, lost wages, pain and suffering for you and your passengers | The core coverage. Limits written per person / per accident, like 100/300 |
| UM property damage | Repair or total loss of your vehicle | Low caps in some states ($3,500 in California), and hit-and-run claims often excluded |
| Underinsured motorist | Shortfall of coverage when the at-fault driver's limits are less than your damages | Math on offset vs. Excess can vary depending upon which state you live in. |
How Does Underinsured Motorist Coverage Work?
Underinsured motorist coverage applies when the at-fault driver has liability insurance but it is not enough to pay for your injuries. Most of your claim will be uncovered if the driver causing $200,000 injury was covered by state minimum policy. How much underinsured motorist coverage (UIM) covers depends on whether you live in an offset or excess state. Offset states, also known as gap or reduced-by states, require that every dollar paid out by the at-fault driver's insurer must first be subtracted from your total limit of underinsured motorist coverage. Excess states allow your UIM coverage limit to sit on top of the amount paid by the at-fault driver's insurer. The difference between these two approaches can be quite large even if both parties have equal coverage limits.
Offset mechanisms present an operational problem. If your Underinsured Motorist (UIM) limit only equals the State Minimum, it can eliminate all of your coverage as soon as the credit for the at-fault drivers payment is applied. In States where there are offsets, brokers should always quote UIM Limits meaningfully higher than the local minimum since this difference is the only portion of the limit that may be paid. The Settlement is also another operational hazard. There are many states which include California that will cancel UIM Limits if you settle on your own with the at-fault driver without obtaining your insurance company's written approval first. See Insurance Code section 11580.2.[2] Get to cash the other carrier's policy-limits check before receiving your insurance company's consent letter and your UIM Claim could disappear.
How Does Uninsured Motorist Coverage Work in California?
Beginning with California's statute, Insurance Code section 11580.2, which mandates uninsured motorists (UM) bodily injury coverage on all auto liability policies, UM coverage can be waived, but only if the named insured signs a written waiver of such coverage in exchange for deletion from the policy or reduced limits. Once signed, this agreement remains in place until the named insured revokes it.[2] California is also an offset state for UIM and prohibits stacking, so only one limit applies per accident.
Beginning in January 1, 2025, Senate Bill 1107 increased the State's minimum liability limits to $30,000 for each person and $60,000 for each accident. Accordingly, the UM coverage amount that the insurer must provide will increase with those changes.[3] As such, you are required to have the same limits for your UMBI as your liability limits. However, the insurance carrier has no obligation to provide you with an excess of 30/60. UMPD, which is governed by Insurance Code Section 11580.26, is a separate coverage that pays out the lesser of either actual cash value for your vehicle or $3,500, and it will only pay benefits if the uninsured motorist or vehicle is identified and the insurance carrier receives a report of the accident within 10 business days after the date of loss.[4] Once again, there is also a time limitation for filing the UM claim. Pursuant to Section 11580.2(i) of the code, you must institute litigation against the uninsured party, enter into a written stipulation with regard to damages, or send a request for arbitration via certified mail, all within two years after the accident occurred, or your claim will be barred.[2]
In California, waiving UMBI will save you very little money but it forfeits your only realistic recovery against California's large population of uninsured drivers. So keep it, and match it to your liability limits.
How Much Uninsured Motorist Coverage Should You Buy?
Most insurance companies won't write an Uninsured Motorist (UM) limit that exceeds your Liability Limit. Therefore, when you select your liability limits they set both limits for your UM as well. Since your UM limit will typically cost only a small fraction of your liability premium, you can match them. The reason behind matching these limits is because the injury level that made you buy $250,000 of Liability coverage for strangers is the same injury level that applies to yourself and your passengers. If you are purchasing 250/500 liability limits with 30/60 UM limits you're saying a stranger's back is worth more than yours.
CHECK YOUR UMBRELLA TOO. A personal umbrella policy raises your liability coverage limits, however it will usually exclude UM / UIM (uninsured/underinsured motorist) coverage unless you purchase a separate "excess UM" or "umbrella UM" endorsement on your automobile insurance policy. However, this endorsement is only available from some carriers. Thus, if your household's total potential for injuries exceeds the UM limit on your auto policy, this is the only way to get those UM limits in line with your umbrella coverage limits.
How Does UM/UIM Work on a Commercial Auto Policy?
Uninsured and Underinsured Motorist coverage on a business auto policy will appear separately in the declaration portion of the policy with a corresponding state specific endorsement to activate instead of being part of the CA 00 01 coverage form. ISO publishes an individual UM endorsement for each state that falls into the CA 21 series. In addition, there is need for a covered auto symbol adjacent to each of the coverage lines listed above. Symbols 2, 3, 4 and 7 are available to indicate UM coverage and symbol 6 is available for those who have their autos garaged in a state where UM cannot be rejected.
Every State that Vehicles are Garaged in will have their own forms for an Offer, Rejection, and Limits Selection. A Missing or Defective Rejection Form may Read UM Coverage into a Liability Policy at Full Bodily Injury Liability Limits as a Matter of Law. The State of Florida is an Example: Section 627.727 of the Florida Statutes Deems UM Coverage to be Equal to Bodily Injury Liability Limits unless a Named Insured Signs a Written Rejection or Selects Lower Limits.[5] Therefore a $1,000,000 Liability Policy with a Badly Prepared Rejection Form Carries $1,000,000 of UM.
Frequently asked questions
Is uninsured motorist coverage required by law?
It varies by state. Some states have made the UM Bodily Injury coverage mandatory and non-rejectable (this is why business auto symbol 6 was created). Many other states, including California, mandate that this coverage be included unless you reject it in writing. No state prohibits an insured from purchasing this coverage, and a signed written waiver is the only way the coverage legitimately disappears from your policy.
Does uninsured motorist coverage pay for damage to my car?
Only the property damage part, UMPD, and only when it is available. UM bodily injury never pays for vehicles. UMPD often carries restrictions, like California's $3,500 cap, and it typically requires identification of the uninsured motorist/vehicle. The majority of the time if you have a Collision policy then your automobile is already covered by your insurance company and therefore UMPD will serve to cover your deductible.
What happens if I rejected UM coverage and an uninsured driver hits me?
Your policy does not pay for your damages (injuries), and you are limited to filing a claim against an uninsured motorist who by definition did not have insurance and has very little of value that could be collected. Health insurance will cover some treatments. However it will not cover lost wages, or pain and suffering. A UM waiver may be revoked at any renewal, and often mid-term, by simply sending a written request to your carrier to cancel your waiver.
Is underinsured motorist coverage worth it if I already have health insurance?
Yes, for most people. Your health insurance will only pay for your medical expenses based on what you are entitled to after paying your deductible and using providers in-network. In addition, as part of its contract with you to provide health care coverage, your health insurer may assert a lien against any recovery you receive for an injury related to the accident.
Underinsured Motorist (UIM) coverage pays for both loss of income and for the "general" or "pain & suffering" damages you have incurred from your injuries, neither of which is covered by any health plan. And UIM also provides your passengers with some level of protection.
The two forms of coverage don't overlap nearly as much as their titles might suggest.
This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.
The Bottom Line
Uninsured and underinsured motorist coverage (UM/UIM) will turn your personal automobile policy into the payment source whenever the at-fault vehicle has no coverage (uninsured), or if the other party's coverage amount is not sufficient to cover all of your damages (underinsured). The cost to add this coverage is minimal. Because more than one in seven drivers are uninsured, UM/UIM is the only reasonable way you can recover from an injury resulting from an accident that was caused by another party who either had no insurance or insufficient amounts. When you live in an offset state, as we do here in California, a minimum limit can end up paying nothing at all. Therefore, make sure to match your UM/UIM coverage limits to your bodily injury liability limits, and have your agent/broker verify that there is no existing waiver of UM/UIM coverage on your current policy.
References
- 1.Insurance Research Council. “One in Three Drivers Are Either Uninsured or Underinsured in the U.S..” Accessed July 2026. https://www.insurance-research.org/news/one-three-drivers-are-either-uninsured-or-underinsured-us-exposing-themselves-and-other ↩
- 2.California Legislative Information. “Insurance Code Section 11580.2.” Accessed July 2026. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS§ionNum=11580.2 ↩
- 3.California Legislative Information. “Senate Bill 1107 (2023-2024), Protect California Drivers Act.” Accessed July 2026. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB1107 ↩
- 4.California Legislative Information. “Insurance Code Section 11580.26.” Accessed July 2026. https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=INS§ionNum=11580.26 ↩
- 5.Florida Senate. “Section 627.727, Florida Statutes.” Accessed July 2026. https://www.flsenate.gov/Laws/Statutes/2025/627.727 ↩