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Uninsured motorist (UM) coverage generally applies when an at-fault driver has no bodily liability insurance; underinsured motorist (UIM) coverage generally applies when the driver has insurance, but not enough to cover the loss. Whether a particular claim qualifies—and how much the policy pays—depends on state law and the policy’s terms.
UM vs. UIM at a glance
| Question | Uninsured motorist (UM) | Underinsured motorist (UIM) |
|---|---|---|
| What does the at-fault driver have? | No bodily liability insurance, in the general case. | Liability insurance, but limits that may be too low to pay all damages. |
| What losses might be covered? | Depending on state and policy, bodily injury and/or damage to your vehicle. | Generally bodily injury; check your state and policy for available coverage and terms. |
| How is a claim decided? | Policy wording and state rules determine eligibility, limits, and required evidence. | State law and policy wording define when the other driver counts as underinsured and how limits interact. |
These are general distinctions, not guarantees that a particular accident or loss is covered. The NAIC’s 2025 Auto Insurance Database report defines UIM as protection when the at-fault driver is insured but has limits inadequate to pay all damages in a serious accident.
What UM coverage can cover
Bodily injury
UM bodily injury coverage can help compensate an insured person hurt by an at-fault driver without bodily liability insurance. The NAIC also identifies certain hit-and-run situations, cases where the other insurer denies coverage, and cases where that insurer becomes insolvent. A hit-and-run does not automatically qualify: the policy and state rules govern the definition, evidence, and claim process.
Damage to your vehicle
UM property damage coverage may pay for damage to your car when an uninsured or hit-and-run driver is at fault. It is a separate coverage component from UM bodily injury, and availability and terms vary. Check your declarations page and policy rather than assuming that having UM means vehicle repairs are covered. The NAIC’s auto insurance shopping tool separates UM bodily injury, UM property damage, and UIM.
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How UIM works when the other driver has low limits
UIM is relevant when the at-fault driver has insurance but the available liability limits may not cover all damages. The driver’s insurer may pay under its liability coverage, while your UIM coverage may provide additional protection under your policy’s terms. The exact trigger and calculation are not uniform nationwide: state law and policy language determine how the other driver’s limits affect your UIM recovery.
North Carolina example: a difference between limits
North Carolina’s Department of Insurance says UIM pays a maximum equal to the difference between the at-fault driver’s liability limits and the insured’s UIM limits. This is a North Carolina rule as described by that department, not a formula to assume in other states. See the North Carolina DOI’s auto insurance coverage guidance and confirm the calculation that applies to your own policy.
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Do you need both UM and UIM?
They address different situations: UM generally concerns an at-fault driver with no insurance, while UIM concerns an insured driver whose limits are inadequate. Whether either is required, offered, or rejectable depends on the state. The NAIC’s 2025 database report describes a varied set of state rules: a majority of states require insurers to offer UM, some allow rejection, and UIM is usually not required. This is a dated national overview, not a substitute for checking current requirements with your state insurance department.
As context for the risk UM is designed to address, the NAIC reports an Insurance Research Council estimate that 15.4% of U.S. motorists were uninsured in 2023—about one in seven. The reported state range was 5.7% in Maine to 28.2% in Mississippi. These are 2023 estimates, not a 2026 measurement. See the NAIC’s uninsured motorists page.
What to check in your policy
- Your state’s rules: Check whether UM or UIM must be offered or carried, and whether rejection is permitted. Your state insurance department can confirm current requirements.
- Coverage type and limits: On your declarations page, look for UM and UIM bodily injury limits and whether UM property damage is included. Do not assume one component includes another.
- Election or rejection paperwork: If you declined coverage or selected limits, review the applicable forms and confirm what your insurer has on file.
- Definitions and exclusions: Read how the policy defines an uninsured or underinsured vehicle, hit-and-run claims, covered people, and qualifying losses.
- Claim requirements: Check reporting deadlines, evidence requirements, and other steps in the policy. Contact your insurer promptly after an accident if you may make a claim.
A licensed insurance agent or your state insurance department can help explain how the rules apply where you live. If you are comparing policies, ask how the UM/UIM limits and definitions differ—not just whether the coverage appears on the quote.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.UM/UIM is not GAP insurance
GAP insurance addresses a different financial shortfall: the difference between a vehicle’s value and the amount remaining on a loan or lease. It is not a substitute for injury protection when an uninsured or underinsured driver causes a crash. The NAIC explains this distinction in its consumer auto insurance guidance.
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