Uninsured Motorist Coverage- A Quick Guide

Most states in the US require auto insurance, but not all people are insured. An article in Progressive Commercial states that nearly 15 % of drivers do not have the legally required liability insurance.

And even if you’re insured, you won’t get reimbursed if the driver that hits you is an uninsured motorist. That’s when an uninsured motorist coverage policy comes handy to the insured, which agents can help acquire. But among all insurance policies, is tapping into this market worth it for an agent? Let’s find out!

What is an Uninsured Motorist Insurance (UMI)?

Uninsured motorist insurance is a policy that covers your expenses if someone without a car insurance hits you. The expenses include medical bills or car repair bills. It’s a part of a vehicle insurance policy and also works when that person doesn’t have liability insurance or enough insurance.

Uninsured Motorist Insurance options may vary widely by state, including coverage options, available limits, and mandatory requirements. Depending on the state, the uninsured motorist coverage may be of the following three categories:


· Uninsured Motorist Insurance (UM)

Covers medical bills, lost wages, and pain and suffering for the insured and its passengers. Often termed as Uninsured Motorist Bodily Insurance (UMBI) too.

· Underinsured Motorist Insurance (UIM)

Covers the same expenses as UM, but only if the one who hit you has insufficient insurance.

· Uninsured Motorist Property Damage insurance (UMPD)

Covers only the property damages an uninsured driver causes to your vehicle. The covered property is inclusive of personal property as well as your car, depending on the state. However, UMPD is not available in all states.

Stacked vs. Unstacked 

Stacked insurance policy allows increment in your uninsured motorist coverage based on the number of cars you insure. For example, you have insured 3 of your vehicles under a UMBI policy, which is worth $10,000. Now, imagine an uninsured motorist hits you. You can combine all three of your vehicles’ $10,000 insurance to provide a $30,000 coverage through a stacked insurance policy.

But if you decide to stack your coverage, you should expect an increase in your premium as well. Also, a stacked coverage policy is not available in every state.

In short, for stacked insurance to kick in, you should meet the following conditions:

  • You have multiple vehicles – all insured.
  • You’re the victim in the accident.
  • The other driver doesn’t have insurance.
  • The damage cost is higher than the uninsured motorist coverage of any one of your vehicles.

Meanwhile, an unstacked policy doesn’t let you combine the insurance coverage of your multiple vehicles. And so, it is not as costly as a stacked insurance. While profitable, agents need to be mindful when selling stacked insurance as some companies or the state itself does not allow this.

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Collison Insurance vs. Uninsured Motorist Insurance

Collision insurance helps the insured cover costs in an accident, with no concern about who’s at fault. Moreover, it will even cover expenses if you hit an object. However, it excludes cases of theft, vandalism, and bodily damages, which is covered by uninsured motorist insurance. So, even if you have collision insurance, you can still have uninsured motorist insurance.


The Trends

According to Insurance Research Council, 13% of the US population is driving around without insurance as of 2015. It means that more than 30 million drivers, or one in eight drivers, are uninsured. While some states are pushing to decrease these numbers, the market to sell uninsured motorist insurance is still huge. Here are the top 10 states with the highest uninsured motorist rates, according to AAG:

  1. Florida
  2. Mississippi
  3. New Mexico
  4. Michigan
  5. Tennessee
  6. Alabama
  7. Washington
  8. Indiana
  9. Arkansas
  10. District of Columbia

These states are the best market to sell uninsured motorist coverage. Another incentive to sell such policies can be legal penalties. While penalties differ across states, they all involve fees, license suspension, and jail time.

Final Verdict

All in all, uninsured motorist insurance is a vast market – at least in the select few states. Despite strict regulations, many people still are uninsured. In the top 10 states for uninsured motorists, an insurance agent can sell a significant number of uninsured motorist coverage policies. The penalties are indeed strict – which agents can leverage to make sales. Thirty million population can earn you huge profits if you tap into it effectively.

Learn how you can flourish as an agent after one call!

Schedule a call right now and learn how you can ease your work, sell more, and increase your profits!

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