One in three American drivers is either carrying no insurance or carrying so little it will not matter. That is the finding of the Insurance Research Council’s study of 2017 through 2023 data, released in February 2025: 15.4% of drivers uninsured, another 18.0% underinsured, 33.4% combined, up about ten percentage points since 2017.
Uninsured motorist coverage is the line on your policy that handles those people, and calculated from the National Association of Insurance Commissioners’ auto insurance database, it costs an average of $88.91 a year against $288.46 for bodily injury liability. You are paying roughly 31 cents on the dollar for protection against the same category of injury, except this time the person being protected is you.
The bigger risk is the one nobody writes about
Read the pages that rank for this and you will get a clean explanation of the difference between uninsured and underinsured motorist coverage, then almost nothing about which one you actually need. Progressive cites a figure of nearly 13% uninsured and never gives a number for underinsured at all.
But underinsured is the larger problem. The IRC’s own split puts underinsured drivers at 18.0% against 15.4% uninsured. The person who wrecks your spine is more likely to have a policy than not. They will simply have bought the smallest one their state sells.
Look at what those minimums are. Florida requires no bodily injury liability whatsoever, only property damage and personal injury protection. Louisiana and Pennsylvania require $15,000 per person. The most common statutory floor across the country is $25,000. Meanwhile the National Highway Traffic Safety Administration’s economic cost study puts the lifetime cost of a single serious injury, the MAIS3 category, at $71,419, with $13,269 of that in medical care and $23,096 in lost productivity. Severe injury, MAIS4, runs $280,726. Critical injury runs $979,328.
So a minimum-limits driver in Pennsylvania who puts you in the hospital with a serious injury covers 21% of what that injury costs you. Against a severe injury, their policy covers 5.3%. Against a critical one, 1.5%. Everything above that number is yours unless you bought underinsured motorist coverage, and no amount of being right about who caused the crash changes that arithmetic.
The claims data confirms the exposure is real rather than theoretical. The average uninsured and underinsured bodily injury claim the industry paid, per NAIC’s database, was $42,499. That is 478 times the average annual premium for the coverage, and already 1.7 times a $25,000 state minimum.
The offset rule that decides what you actually collect
Here is the mechanism that determines whether your coverage does what you think, and not one of the top-ranking articles mentions it.
There are two ways a state can structure underinsured motorist coverage. In an add-on or excess state, your UIM limit stacks on top of what the at-fault driver’s insurer pays. In a difference-in-limits or reduced-by state, your UIM limit is reduced by whatever you already collected.
Georgia’s statute contains both, which makes it the cleanest illustration. Under the default, coverage applies “in addition to the amounts payable” under the at-fault driver’s liability insurance, as excess coverage. But a policyholder “may reject” that and “select in writing” the alternative, under which the other car is considered underinsured “only for the amount of the difference between” their liability limits and your UIM limits.
Run $100,000 of UIM against a $25,000 at-fault driver and $120,000 of damages. In an add-on state you collect the $25,000 plus up to $100,000, capped at your actual losses, so $120,000. In a reduced-by state your UIM pays $100,000 minus $25,000, which is $75,000, for a total of $100,000. Same limit on the declarations page, same premium bracket, $20,000 different outcome.
Worse, in states that use a limits-comparison trigger, carrying UIM at exactly the same limit as the at-fault driver can pay nothing at all, because their car is not technically underinsured relative to your coverage. This is why “match your liability limits” is decent advice but incomplete. In some states you need to exceed them.
North Carolina went the other way recently and its statute is worth reading as a model. It abolished the setoff outright: underinsured coverage “shall not be reduced by a setoff or credit against any coverage, including liability insurance,” and applies “to the first dollar” of a claim beyond the exhausted liability policy. North Carolina also defaults your UIM limit to the highest bodily injury liability limit on your own policy, up to $1 million, which is a state legislature endorsing the exact advice in this article.
The written rejection you may have already signed
Most states require insurers to offer uninsured motorist coverage and let you decline it, but only in writing. Texas puts it plainly on its Department of Insurance page: companies must offer the coverage, and “if you don’t want it, you have to turn it down in writing.”
The corollary is the part to worry about. In a state like Georgia where the consumer-favorable add-on form is the default, choosing the cheaper reduced-by version also requires a signature. Which means somewhere in the stack of paperwork you initialed at the agent’s desk, you may have downgraded the structure of your own coverage without anyone explaining what the two options were. Pull the declarations page and look.
What uninsured motorist coverage buys per dollar
The ratio is the argument. Calculated from NAIC’s database, uninsured and underinsured coverage averages $88.91 per insured vehicle per year against $288.46 for bodily injury liability, about 31%. The pattern holds across most states: California $85.46 against $265.80, Georgia $137.20 against $426.81, Ohio $50.93 against $174.02, Illinois $58.43 against $231.24.
Florida is the instructive outlier at $260.08 against $403.08, or 65%, which makes sense in the one state that does not require bodily injury liability at all. When nobody has liability coverage, the coverage that substitutes for it gets expensive.
Set that against the severity figures. The average paid UM and UIM bodily injury claim was $42,499, while the comparable bodily injury liability claim averaged $28,919. The claims under this coverage are larger than the claims under the liability coverage that costs three times as much, because the people who drive without insurance are not a random sample of drivers.
I could not find a published figure for what it costs to raise UM and UIM from a state minimum to 100/300, because NAIC publishes averages across all limits rather than rates by limit. Get that number from your own renewal quote rather than from an article, including one that sounds as confident as this one.
Two things most people do not know it covers
It follows you out of the car. Georgia’s statute defines an insured as the named insured, resident spouse and relatives of either “while in a motor vehicle or otherwise.” That last phrase is the pedestrian hook. Struck while walking or cycling by a driver with no insurance, your own auto policy responds. None of the top three articles mentions this.
It covers hit-and-run and phantom vehicles. Washington’s Office of the Insurance Commissioner describes a phantom vehicle as one that causes injury without touching your car, and notes you must report it to police within 72 hours. That deadline is short and easy to miss while you are dealing with the aftermath.
What to do this week
Find the UM and UIM lines on your declarations page and compare those limits to your bodily injury liability limits. If they are lower, or if the coverage is absent because you declined it, call and price matching them, then price exceeding them.
Then ask your agent two specific questions. Whether your state uses the add-on or the reduced-by structure, and if both exist, which one your policy has. And whether your state permits stacking across multiple vehicles on one policy, which roughly half of states prohibit.
One timely note if you are in New Jersey. The second phase of P.L.2022, c.87 took effect January 1, 2026, raising minimum bodily injury limits to $35,000 per person and $70,000 per accident, and the Department of Banking and Insurance confirmed in Bulletin 25-06 that minimum uninsured and underinsured limits rose in lockstep. Your coverage may already have gone up, and your premium with it.
Uninsured motorist coverage is the rare line item where the cheap option and the right option are the same option. At 31 cents on the liability dollar, protecting against claims that run larger than liability claims do, it is the closest thing to a free lunch on an auto policy. For the rest of the bill, our guide to shopping your auto policy is where the offsetting savings live, and dropping collision on an older car frees up premium you can redirect here.
