Uninsured/underinsured motorist coverage is a good investment in Colorado, where more than 13.3 percent of drivers are uninsured.

UM/UIM Insurance Cheap, Worth the Money

When another driver hits you, you would naturally expect his insurance company to pay for your damages. But what if the driver doesn’t carry automobile insurance, or the limits of the policy are too low to cover all of your damages?

That scenario illustrates the importance of buying what is known as uninsured/underinsured motorist (UM/UIM) coverage. This type of insurance will pay for injuries to you and your passengers, and potentially even damage to your vehicle when an uninsured driver hits you. Without it, you could be stuck with expensive medical bills, automobile repair costs and other expenses, even though the accident wasn’t your fault.

UM/UIM coverage is insurance that you buy to take the place of the coverage another driver should have carried. Should you be involved in an auto accident in Colorado in which the at-fault driver lacks sufficient liability insurance, your own UM/UIM coverage will protect and reimburse you and your passengers but will not cover the at-fault driver or his vehicle.

According to data compiled by the Insurance Information Institute, 13 percent of drivers in the U.S. drive without insurance, and approximately 13.3 percent of the drivers in Colorado are uninsured. Florida has the highest percentage of uninsured drivers at 26.7 percent, and Maine the lowest, with just 4.5 percent.

What Is the Difference Between an Uninsured and an Underinsured Driver?

An uninsured driver is defined as a motorist who:

  • Caused an accident and subsequently left the scene (commonly known as a hit-and-run driver).
  • Doesn’t have automobile insurance.
  • Carries automobile insurance, but not enough to meet the minimum liability requirements of the state in which he lives.
  • Has automobile insurance, but his carrier denied the claim and he doesn’t have the money to pay for your damages out of his own pocket.

An underinsured driver is someone who purchases only the minimum coverage required by law, which in some states is extremely low. In California, for example, drivers are required to carry only $15,000 per person and $30,000 per accident of bodily injury coverage, limits that are often insufficient to cover the bills sustained in a serious accident. In Colorado, the limits are $25,000 per person and $50,000 per accident.

Twenty states along with the District of Columbia have mandatory requirements for uninsured or uninsured coverage. In Colorado, insurance companies must offer UM/UIM coverage in an amount equal to the bodily injury liability limits selected, but there is no state law that says you have to buy it.

Cost of UM/UIM Coverage Low, Benefit High

Although you do not have to purchase UM/UIM coverage in Colorado, you probably should, as it offers valuable protection at a relatively low cost — approximately 5 percent of your annual automobile insurance premium. The exact costs can depend upon a variety of factors, including driving history, prior claims, and policy discounts.

According to a NerdWallet report, a 30-year-old California motorist with a clean driving record could expect to pay around $9 extra per month for UM/UIM coverage (the highest rate in the U.S.), while a similar driver in Illinois would have to shell out just $3 a month more. But these costs are relatively minor compared with the high medical and auto repair costs a driver could face if involved in a collision with an uninsured or underinsured driver.

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