Every state except New Hampshire requires drivers to carry liability insurance, the coverage that pays for the other person's damage when you cause a crash.1 What almost nobody realizes until they're hit is that liability insurance protects everyone else on the road from you. It does nothing to protect you from them. That gap is what uninsured motorist (UM) and underinsured motorist (UIM) coverage is built to close.
If you're recovering from a crash and just found out the other driver had no policy, or a policy too thin to cover what you're facing, this guide walks through how UM/UIM coverage works nationally: what it pays for, who has to offer it, how claims actually get paid, and the mistakes that cost people their own money. Rules differ by state in ways that matter, so treat this as the map and check your state's specific rules for the details that apply to your policy.
The gap between compulsory insurance and reality
Insurance mandates sound like they should solve the problem. They haven't. The Insurance Research Council, the research arm of the property-casualty insurance industry, found that 15.4% of U.S. motorists were driving without any insurance in 2023, and that once you add drivers who carry only a thin liability policy, a full third of drivers on the road (33.4%) were either uninsured or underinsured that year. That combined rate has climbed 10 percentage points since 2017.2
The risk isn't spread evenly. IRC's 2023 data put Mississippi at 28.2% uninsured, the highest in the country, with New Mexico (24.1%) and the District of Columbia (23.1%) close behind. Maine, at 5.7%, had the lowest rate, followed by Utah and Idaho.2 Wherever you live, the odds that the driver who hits you is uninsured or underinsured are real enough that your own policy, not theirs, is often what actually pays your medical bills.
The Insurance Information Institute puts it plainly: laws requiring liability coverage haven't done much to shrink the uninsured population, because some drivers can't afford insurance and others with surcharges for past violations or accidents avoid buying it at all.3 UM/UIM coverage doesn't fix that. It's the workaround.
What uninsured motorist coverage pays for
UM coverage steps into the at-fault driver's shoes when that driver has no liability insurance at all. It typically pays for your medical bills, lost income, and pain and suffering, using the limits you bought on your own policy, the same way the at-fault driver's liability coverage would have paid if they'd had any.3
Hit-and-run crashes get folded into UM coverage too, on the theory that a driver who flees is functionally uninsured whether or not a policy actually exists. That's the part that surprises people: if you're hit by a vehicle that speeds off before you get a plate number, you generally file with your own UM carrier, not a mystery insurer you'll never identify.
There's a wrinkle worth knowing before it costs you a claim. Many states require some form of physical contact between the fleeing vehicle and your car, or your body, before a hit-and-run claim qualifies as a UM claim, a rule meant to prevent someone from blaming a single-car crash on a phantom driver who never existed. Contact through debris the fleeing vehicle threw off, or through a chain reaction where the phantom car hit another car that then hit you, generally counts. States that impose this rule often still accept a no-contact claim if you have an independent witness, someone other than you or your passengers, who can corroborate what happened; Florida builds that witness exception directly into its uninsured motorist statute.4 Some states don't require physical contact at all. Ask early, because if you're going to need a witness, that person is easiest to find in the days right after the crash.
Hit-and-run crashes aren't rare enough to treat as a footnote. NHTSA counted 2,758 traffic deaths involving a hit-and-run driver in 2024, down 5.3% from 2,911 the year before, out of 39,254 total traffic fatalities that year.5
What underinsured motorist coverage pays for
UIM coverage handles the more common scenario: the at-fault driver has insurance, it's just not enough. A driver carrying the state-minimum liability limit, often $25,000 or $30,000 per person, can burn through that in a single ambulance ride and a few days in the hospital. Once their policy is tapped out, UIM coverage on your own policy covers the rest, up to your own UIM limit.
How that gets calculated is one of the places states genuinely diverge, and it's worth understanding even at a national level because it changes what your UIM limit is actually worth. Most states use what amounts to a damages model: if your total losses exceed the at-fault driver's liability limits, your UIM coverage pays the difference, up to your UIM limit, regardless of how your limit compares to theirs. Some states historically used a gap model instead, where UIM only paid out, and only up to the difference between your limit and the at-fault driver's limit, meaning high UIM limits could still produce a small payout if the at-fault driver's liability limits were also high.
Virginia illustrates how much that distinction matters, because the state switched models. Before July 1, 2023, Virginia calculated available UIM coverage by subtracting the at-fault driver's liability limits from the insured's own UIM limits, an offset that could erase most of the benefit. The amendment to Va. Code section 38.2-2206 that took effect that date now requires UIM coverage to pay on top of whatever the at-fault driver's liability policy pays, unless the policyholder specifically signs an election to keep the old offset.6 Identical UIM limits can be worth dramatically more or less depending on which model a state uses, which is exactly the kind of detail worth confirming against your own state's rules.
Whether you're required to carry it
Roughly 20 states and the District of Columbia require insurers to include UM coverage, UIM coverage, or both in every auto policy they sell, unless the policyholder rejects it in writing.3 Everywhere else, insurers generally have to offer the coverage, but you're free to decline it, sometimes by not checking a box, sometimes by signing a specific rejection form. Florida's statute is a clear example: no bodily-injury liability policy can be issued in the state without UM coverage attached unless a named insured makes a written rejection.4
That "optional unless rejected" structure means plenty of drivers carry UM/UIM coverage without realizing they agreed to it, and plenty of others signed it away years ago without realizing what they gave up. Your declarations page will say whether you have it. It's worth checking before you assume your own policy has your back after a crash.
Picking a limit, and the stacking question
Insurers commonly default UM/UIM limits to match your liability limits unless you ask for something different. Given how thin state-minimum liability limits often are, and how common underinsurance is, buying UM/UIM limits well above the state minimum, if your budget allows it, is one of the more effective ways to protect yourself against a driver carrying the least insurance the law allows.
Stacking is the other lever. If you insure more than one vehicle, or carry more than one policy, some states let you combine, or "stack," UM/UIM limits across those policies to reach a higher total available for a single claim. Others prohibit it outright. California is unambiguous: its insurance code states that no matter how many vehicles, policies, or premiums are involved, limits from two or more policies can never be added together to determine what's available to an injured person.7 States that do allow stacking usually cap it in some way, limiting it to your own policies rather than combining with a stranger's, so don't assume a number until you've confirmed your state's rule.
The settlement trap that can void your claim
This is the mistake that costs people real money, and it's rarely on anyone's radar until a UIM claim gets denied over it. When the at-fault driver's insurer offers to pay its full policy limits, the instinct is to take the deal and move on. But most UIM policies include a consent-to-settle clause, and releasing the at-fault driver before your own UIM insurer has weighed in can forfeit the very claim you were counting on.
The mechanism is subrogation. Once your UIM insurer pays you, it has the right to go after the at-fault driver to recover what it paid out. Settle with, and release, the at-fault driver first, without giving your insurer a chance to protect that right, and you may have signed away the thing your insurer needed in order to pay you at all.
Alabama's Supreme Court laid out exactly how that plays out in Turner v. State Farm Mutual Insurance Co. A paramedic injured when the ambulance he was riding in collided with another vehicle agreed to settle his claim against the at-fault driver for that driver's $25,000 policy limit. State Farm, his own UIM insurer, declined to consent to the settlement and instead sent him a check for $25,000 to preserve its subrogation rights, the exact procedure Alabama courts require of an insurer that wants to withhold consent. He sent the check back and settled with the at-fault driver anyway. The court held that by doing so, he repudiated the consent-to-settle provision in his own policy, discharging State Farm's obligation to pay UIM benefits at all.8
States build a formal process to prevent exactly that outcome, and it's worth using it. Kentucky requires written notice by certified or registered mail to every UIM insurer before you settle for less than full compensation; the insurer then has 30 days to consent or to preserve its subrogation rights by paying you the settlement amount itself.9 The District of Columbia runs the same idea on a 60-day clock, and if the claimant's insurer misses that window, it's treated as having waived subrogation and the claimant is free to accept the original settlement.10 The number of days and the required paperwork differ by state, but the underlying rule doesn't: notify your own insurer in writing before you sign anything with the other side.
Arbitration, lawsuits, and bad faith
Many UM/UIM policies route disputes to arbitration instead of court, and whether that holds up depends on where you live. Some states let insurers write mandatory arbitration into the UM/UIM endorsement. Others don't allow it. Georgia is explicit on this point: state law prohibits any UM endorsement from requiring arbitration or otherwise restricting a policyholder's right to hire a lawyer and sue.11 Georgia backs that up with a bad-faith penalty, too: an insurer that refuses in bad faith to pay a covered UM claim within 60 days of a demand can owe up to 25% of the recovery or $25,000, whichever is larger, plus the policyholder's attorney's fees.11
Whether you're negotiating with an adjuster or heading toward arbitration or a lawsuit, an attorney who handles UM/UIM claims regularly will know your state's rules on this front, including whether your policy's arbitration clause actually holds up. Our legal directory can help you find one.
How long you have to file
Because a UM/UIM claim is a claim against your own insurance contract, not a personal-injury claim against the other driver, it usually runs on your state's contract statute of limitations rather than the shorter deadline for personal injury lawsuits. Contract deadlines tend to be longer, sometimes considerably so, but when the clock actually starts isn't settled the same way everywhere, and getting it wrong can cost you the whole claim.
Some states start the clock on the date of the crash. Alabama's Supreme Court held in 2024 that a direct UIM claim against your own insurer accrues on the date of the accident, applying the state's six-year contract deadline from that day, not from whenever a dispute over the at-fault driver's own coverage gets resolved.12 Other states start the clock later, when the insurer actually breaches the contract by denying the claim. Maryland's high court reached that conclusion in 2020, holding that the limitations period on a UIM claim begins when the insurer denies the demand for benefits, not when the underlying tortfeasor's coverage is exhausted.13 Pennsylvania's Supreme Court landed in the same place in 2017, ruling that the clock starts at the alleged breach of the insurer's contractual duty, not the moment a claimant first learns the other driver was underinsured.14
That split matters because it decides how long you actually have, and whether "the crash was three years ago" is even the right question for your state. Don't estimate this one. Pull your policy, find out which rule your state follows, and if there's any chance you're near a deadline, talk to a lawyer before more time passes.
This is general information, not legal advice.
Sources
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National Association of Insurance Commissioners, "Insurance Topics: Uninsured Motorists," https://content.naic.org/insurance-topics/uninsured-motorists
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Insurance Research Council, "Uninsured and Underinsured Motorists: 2017-2023" (Feb. 17, 2025), https://insurance-research.org/news/one-three-drivers-are-either-uninsured-or-underinsured-us-exposing-themselves-and-other
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Insurance Information Institute, "Background on: Compulsory Auto/Uninsured Motorists," https://www.iii.org/article/background-on-compulsory-auto-uninsured-motorists
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Florida Statutes section 627.727 (2025), https://www.flsenate.gov/Laws/Statutes/2025/0627.727
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National Center for Statistics and Analysis, "Overview of Motor Vehicle Traffic Crashes in 2024" (NHTSA, Report No. DOT HS 813 791, April 2026), https://crashstats.nhtsa.dot.gov/Api/Public/ViewPublication/813791
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Virginia Code section 38.2-2206, https://law.lis.virginia.gov/vacode/title38.2/chapter22/section38.2-2206/
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California Insurance Code section 11580.2, https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=11580.2&lawCode=INS
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Turner v. State Farm Mutual Insurance Co., No. 1181076 (Ala. May 29, 2020), https://acis.alabama.gov/displaydocs.cfm?no=1022968&event=5S20LIXMT
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Kentucky Revised Statutes section 304.39-320, https://apps.legislature.ky.gov/law/Statutes/statute.aspx?id=54466
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D.C. Code section 31-2407.01, https://code.dccouncil.gov/us/dc/council/code/sections/31-2407.01
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Georgia Code section 33-7-11, https://law.justia.com/codes/georgia/title-33/chapter-7/section-33-7-11/
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Ex parte State Farm Mutual Automobile Insurance Co., No. SC-2023-0528 (Ala. Apr. 5, 2024), https://law.justia.com/cases/alabama/supreme-court/2024/sc-2023-0528.html
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Nationwide Mutual Insurance Co. v. Shilling, No. 38 (Md. Apr. 20, 2020), https://law.justia.com/cases/maryland/court-of-appeals/2020/38-19.html
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Erie Insurance Exchange v. Bristol, 174 A.3d 578 (Pa. 2017), https://law.justia.com/cases/pennsylvania/supreme-court/2017/124-map-2016-2.html