After a car accident, it’s common practice to swap insurance company details so drivers can file a claim and recover their losses. But what happens if the driver responsible for your accident doesn’t have enough insurance — or worse, doesn’t have it at all?
We explain your options for covering your losses when you’re in an accident with an uninsured or underinsured driver.
How Car Insurance Works
The car insurance coverage drivers must have is determined by whether they live in a fault or no-fault state.
In fault states, all drivers must carry liability insurance to cover expenses incurred by other drivers when they’re responsible for an accident. This allows injured drivers to file a claim with their insurer to get their car repaired and recover the cost of their medical bills and lost wages without leaving the at-fault motorist out of pocket.
In no-fault states, drivers are responsible for their damages and must have a type of insurance called Personal Injury Protection (PIP). Then, when they’re in an accident, regardless of who caused it, the driver can file a claim with their insurance company.
If a driver’s losses exceed their PIP policy limit and the accident wasn’t their fault, they may sue the at-fault driver. Therefore, in addition to PIP coverage, drivers in no-fault states must also have bodily injury coverage — a type of liability insurance.
However, not all drivers have this insurance, which can leave accident victims with significant expenses and no way to pay them.
Why Drivers Don’t Get Insurance
Car insurance can be expensive, and some drivers may struggle to afford even the minimum policy limits required by law. Others may intentionally forego insurance to save money, thinking they’ll never get found out because they won’t end up in an accident.
Other times, a driver’s policy may be canceled or lapsed due to non-payment or other policy violations.
Whatever the case, what can you do if you’re injured in a car accident and the driver responsible can’t cover your losses?
Your Options for Recovering Damages
If you’re in an accident with an uninsured or underinsured driver, you have several options for covering your expenses.
Uninsured Motorist or Underinsured Motorist Coverage
Uninsured motorist (UM) coverage is a type of car insurance policy that protects you when you’re in an accident caused by a driver who does not have liability insurance.
UM coverage must at least be offered when you take out your policy, but it is mandatory in some states.
Underinsured motorist (UIM) coverage kicks in when the at-fault driver’s insurance policy limit is too low to cover your expenses.
For example, let’s say you sustain $100,000 worth of damages in an accident in South Carolina, a fault state, but the other driver’s insurance policy limits payouts to $50,000. Fortunately, you have UIM coverage. The at-fault driver’s insurer will pay up to the limit — in this case, $50,000 — and you can recover the remaining half from your UIM provider.
But what if you’re in a no-fault state such as New York? If you have $60,000 in PIP coverage to cover your injuries and the at-fault driver has a bodily injury coverage limit of $30,000, you still have $10,000 in bills unaccounted for. If you have UIM, it will cover the difference.
Filing a Lawsuit
After an accident, you should always check your car insurance policy to understand your coverage types and limits. Some insurers include either UM or UIM coverage as default and you can only decline it in writing when taking out your policy. However, if you don’t have this insurance and the at-fault driver’s policy limits are too low — or they don’t have liability insurance — you cannot purchase UM or UIM and apply it retroactively. You must have had it when the accident happened.
In this case, you may be able to file a lawsuit to recover compensation. This process can be complex, as you must gather evidence proving the other party is at fault. However, you can recover significant compensation for your medical expenses, lost wages, property damage, pain and suffering, and more.
You should always speak to a car accident lawyer after a crash that wasn’t your fault, but this becomes even more important if the driver responsible does not have insurance.
In many cases, a driver won’t have insurance because they cannot afford it, so it’s unlikely they could pay a settlement if you’re entitled to significant compensation. A personal injury lawyer can explore your options for recovery, such as a structured settlement — where you receive a payout in agreed-upon installments. They can also determine if another party with the financial resources for a claim might be liable for your accident, allowing you to get the compensation you deserve. These parties can include:
- Another driver who contributed to the crash
- An employer — for example, if you’re in a rideshare accident
- A manufacturer
- A government contractor.
Finding out a driver is underinsured or doesn’t have insurance at all can add more frustration when you’re likely already feeling vulnerable. Fortunately, you have several options for covering your bills, from checking your insurance policy for UM or UIM coverage to filing a compensation claim.