First of all, an uninsured driver is someone who lacks liability insurance. An underinsured is a driver that doesn’t have enough liability insurance to cover your damages.

Now, if an accident occurs, and the at-fault driver is uninsured or underinsured, there is what we call UM (uninsured motorist) or UIM (uninsured motorist) coverage, you can actually use it to cover damages.

It is important to note that some states mandate UM or UIM, while others make it optional. An example of this could be manifested in the fact that states like Connecticut mandate UM/UIM. However, in states like California this coverage is not required, in other words, you can decline it.

In case you have UM/UIM coverage, let’s say your UM limit is $50,000 and you were hit by an uninsured driver, which caused $40,000 in damages. As a result, your insurance company will cover the costs. Another case is being hit by an underinsured driver, your UIM limit is $50,000. The damages caused were $40,000. Now, the driver at-fault liability is $20,00, your insurance company will then cover the rest of the costs.

According to the Insurance Research Council, as of 2022, about 14% of U.S drivers are uninsured. Which underscores the importance of having UM/UIM coverage.

If you don’t have UM/UIM coverage, the only thing you can do to pursue recovery from the at-fault driver’s assets is through a personal injury lawsuit, some might say that it could be a dead end in case this uninsured driver doesn’t have any assets.

Overall, depending on your state (if the coverage is required or optional), you must review their policy in order to ensure UM/UIM coverage.