What Is Uninsured Motorist Coverage?

You’ve just been in an accident with someone who doesn’t have car insurance. The accident was his fault. You're properly insured and rightly want to be compensated for damages. So what happens?

Nothing. You won’t receive a penny.

That is, unless you have an Uninsured Motorist Clause in your car insurance policy. For an extra premium on top of your regular policy, you can get uninsured motorist coverage which will pay you the difference between what the uninsured driver can pay and what you would have been paid had he been insured.

Some states -- New York, Maryland and Illinois -- mandate that carriers provide uninsured motorist coverage.

If you live in a state that does not make the coverage compulsory, your payment limits cannot stray beyond that state’s liability limits. (Read more about what those numbers mean on your car insurance policy.)

Despite the additional cost, Uninsured Motorist Coverage is a wise move. One in seven American drivers is without insurance and if one of those drivers crashes in to you he will almost surely not be able to compensate you for damages and losses. Last year, uninsured drivers cost Americans almost $11 billion in damages that cannot and will not be repaid. Uninsured Motorist Coverage protects you against a large chunk of this risk. And for only a few extra dollars a month, it seems like a smart investment.