Updated July 2026
What Is Uninsured and Underinsured Motorist Coverage Insurance?
Uninsured motorist coverage pays when an at-fault driver has no insurance. Underinsured motorist coverage pays when the at-fault driver's liability limits are too low to cover your full claim. Both coverages protect you from financial loss when another driver causes a crash but can't pay for the damage. Your own insurance carrier pays the claim, up to your UM/UIM policy limits, after the at-fault driver's coverage is exhausted or confirmed absent.
- You're stopped at a red light. Another driver rear-ends you, causing $8,000 in vehicle damage and $15,000 in medical bills. The at-fault driver has no insurance. Your UM coverage pays up to your policy limits. Without UM coverage, you would need to sue the driver personally and attempt to collect $23,000 out of pocket.
- You're hit by a driver who runs a stop sign. You sustain $75,000 in medical expenses. The at-fault driver carries the South Dakota minimum liability limit of $25,000 per person. Their insurer pays $25,000. If you carry $100,000 in UIM coverage, your carrier pays the remaining $50,000. Without UIM, you absorb the $50,000 shortfall.
- A driver sideswiping you on the interstate flees the scene. You have $12,000 in vehicle damage and $6,000 in medical costs. Your uninsured motorist coverage treats the unknown driver as uninsured and pays your claim up to your UM limits. Without UM coverage, you file under collision coverage for the vehicle and health insurance for medical costs, both subject to separate deductibles and coverage gaps.
Who Needs Uninsured and Underinsured Motorist Coverage Insurance?
You should carry UM/UIM if you cannot afford to pay medical bills and vehicle repair costs out of pocket after a crash caused by someone else. If you drive frequently in areas with high uninsured driver rates, or if you carry low health insurance coverage with high deductibles, UM/UIM fills the gap when the at-fault driver has no money to pay your claim.
Compare your UM/UIM annual premium to your health insurance deductible and out-of-pocket maximum, plus your vehicle's replacement cost. If a $30,000 uninsured driver claim would create financial hardship, and your UM/UIM premium is under $250 per year, carry the coverage. If you have $50,000 in liquid savings and strong health coverage, you're effectively self-insuring and can skip it.
How Much Does Uninsured and Underinsured Motorist Coverage Insurance Cost?
UM/UIM coverage typically adds $8 to $20 per month to your premium, or approximately $96 to $240 annually.
- Your UM/UIM policy limits — higher limits cost more, but the incremental cost from $25,000 to $100,000 per person is often under $10 per month.
- Your county's uninsured driver rate — areas with higher uninsured motorist rates may see slightly higher UM/UIM premiums.
- Stacking vs. non-stacking — stacked UM/UIM coverage, which multiplies limits across multiple vehicles on your policy, costs 15% to 40% more than non-stacked.
- Bundling with collision and comprehensive — carriers often discount UM/UIM when you carry full coverage rather than liability-only.
- Your claims history — prior UM/UIM claims can increase your premium at renewal, though less severely than at-fault liability claims.