Protect yourself against uninsured motorists

Uninsured motorists are relatively common

With the exception of New Hampshire, every state in the U.S. has a minimum mandatory car insurance requirement. Despite that, about one out of every eight drivers does not carry auto coverage; in some states, that number is one out of five.

If you’re involved in a serious accident with a motorist who doesn't have an auto insurance policy, you could be at risk for substantial financial losses. Uninsured and underinsured motorist coverage is designed to protect against that possibility.

A handful of states require that uninsured coverage be included in all auto policies. Whatever the laws in your state, it's a good idea. Check your policy or ask your insurance professional to make sure you're covered if the other guy isn't.

Make sure you're insured

Don't go without at least a basic auto insurance policy. Even if you feel it's tough to afford it, in the long run it's for your own financial protection.

To help ensure that everyone, regardless of financial circumstances, can obtain car insurance, some states have programs to assist lower-income drivers. Check with the insurance division in your state to see if they offer such a program. Shop around and learn how you can reduce your car insurance costs and look for insurers that specialize in writing policies for lower-income consumers.

Uninsured motorist coverage

Specific options for uninsured motorist coverage vary by state and insurer, but in general there are three types of protection:

• Uninsured Motorist (UM) insurance – Also known as Uninsured Motorist Bodily Injury (UMBI) insurance, this coverage will pay your and your passengers’ medical bills if you’re involved in an accident with an uninsured motorist who is at fault. In addition, UM insurance will reimburse you and your passengers for lost wages. UM coverage also kicks in if, as a pedestrian, you are hit by an uninsured driver, or if you’re the victim of a hit-and-run accident.

• Uninsured Motorist Property Damage (UMPD) coverage – Uninsured motorist insurance covers bodily injuries but not damage to your car or property. For this, you need UMPD coverage, which, in addition to paying for damages to your vehicle caused by an uninsured driver, generally also covers damage to other personal property such as your house or your fence. Ask your insurance professional or state insurance department whether UMPD coverage is available in your state.

• Underinsured Motorist (UIM) protection – In some instances, an at-fault driver may have liability insurance, but his or her policy’s limits do not cover the full extent of damage to your vehicle. In such cases, UIM insurance will cover the shortfall.

Next steps: Protect yourself from unhinged drivers, too—prevent road rage incidents.