The one coverage that pays you rather than the other party
Liability coverage pays the people you injure. Collision pays for your car. Uninsured and underinsured motorist coverage is the only line on the policy that pays you for bodily injury caused by someone else — and it exists because the person who hits you frequently cannot.
Two distinct situations trigger it. Uninsured motorist applies when the at-fault driver has no coverage at all, or cannot be identified, as in a hit-and-run. Underinsured motorist applies when they have coverage but not enough, which is the far more common case: state minimum bodily injury limits in many states are a fraction of what a single serious injury costs, and a driver carrying exactly the minimum is doing nothing wrong.
The important consequence is that your UM/UIM limit is not sized against your assets — that is what liability limits do. It is sized against your own losses. Medical bills, lost income, and the non-economic damages a claim carries are all yours to recover, and if the at-fault driver's policy runs out, your own UM/UIM coverage is what stands behind them.
Because your health plan and any disability coverage pay first, the exposure is smaller than the gross bill and much larger than nothing. The calculator nets both off before sizing the limit, which is why it asks for your out-of-pocket maximum and your income replacement percentage rather than just for the bill.
Netting the exposure, then applying the offset convention
The medical half. If you have health coverage, the bill is not your exposure. Your exposure is the annual out-of-pocket maximum, plus anything the plan will not pay for at all — out-of-network care, extended rehabilitation, home modification, dental work. That is why the formula uses min(bills, out-of-pocket max): a $400,000 hospital course and a $40,000 one leave you in the same place once the maximum is reached, and a $3,000 bill leaves you with $3,000 rather than the maximum. Note that the maximum resets annually, so an injury spanning a calendar-year boundary can cost you two of them.
The wage half. Multiply monthly income by the months you would be out, then by the share your disability coverage does not replace. A typical group long-term disability benefit replaces a stated percentage of base salary, often with a monthly dollar cap and a waiting period before it begins, so treat the percentage as an approximation and check the cap.
General damages. Pain, suffering and loss of enjoyment are recoverable and are not derived from any receipt. Claims practice frequently estimates them as a multiple of economic loss during negotiation — that is the multiplier input. It is a heuristic used to frame a demand, not a rule of law, and the actual figure depends on injury severity, permanence, jurisdiction and the quality of the medical record. Set it to zero if you want the economic exposure alone.
The offset convention. This is where states diverge sharply, and it changes the answer more than any other input. Under difference in limits, your UIM limit is reduced by the at-fault driver's liability limit, so your total recovery is the larger of the two, not the sum. A $100,000 UIM limit against a $25,000 liability payment yields $100,000 in total. Under add-on, your UIM pays its full limit on top of the liability payment, so the same figures yield $125,000. In a difference-in-limits state a UIM limit at or below the at-fault driver's liability limit pays nothing at all.
Worked example: a six-month injury against a minimum-limits driver
Take a $100,000 course of medical treatment, a health plan with an $8,000 out-of-pocket maximum, $12,000 of care the plan will not cover, a $6,000 monthly income, six months out of work, disability coverage replacing 60%, and a general damages multiplier of 1.5. The at-fault driver carries a $25,000 bodily injury limit; you carry $100,000 UM/UIM on a two-vehicle policy in a difference-in-limits state that permits stacking.
- Medical left to you. min($100,000, $8,000) + $12,000 = $20,000.
- Wages not replaced. $6,000 × 6 × (1 − 0.60) = 36,000 × 0.40 = $14,400.
- Economic loss. 20,000 + 14,400 = $34,400.
- General damages. 34,400 × 1.5 = $51,600.
- Total claim. 34,400 + 51,600 = $86,000. Equivalently, 34,400 × 2.5.
- Coverage available. Stacking two vehicles: 100,000 × 2 = $200,000. Under difference in limits the recovery is max($25,000, $200,000) = $200,000, capped at the $86,000 claim. Nothing is uncovered.
Now remove the stacking and drop the UM limit to $25,000, matching the at-fault driver. Recovery becomes max($25,000, $25,000) = $25,000, and $61,000 of the claim is uncovered — you absorb it, because the at-fault driver by assumption has nothing to collect from. Switch the same figures to an add-on state and the recovery is 25,000 + 25,000 = $50,000, leaving $36,000 uncovered. Same injury, same policy limits, three very different outcomes.
What each UM/UIM limit recovers on the worked example
| Your UM/UIM limit | Recovery, difference in limits | Uncovered | Recovery, add-on | Uncovered |
|---|---|---|---|---|
| $25,000 | $25,000 | $61,000 | $50,000 | $36,000 |
| $50,000 | $50,000 | $36,000 | $75,000 | $11,000 |
| $100,000 | $86,000 | $0 | $86,000 | $0 |
| $250,000 | $86,000 | $0 | $86,000 | $0 |
| $500,000 | $86,000 | $0 | $86,000 | $0 |
Recovery is capped at the claim, which is why every row from $100,000 up shows the same $86,000. The add-on column recovers $25,000 more at every limit below the cap — that is the liability payment it does not deduct.
Choosing a limit and checking your policy
Match UM/UIM to your liability limit as a starting point. Most carriers issue it that way by default, and in many states you must reject or reduce it in writing. The logic is sound: the injury you could cause and the injury you could suffer are drawn from the same distribution, so a limit that is right for one is a reasonable first answer for the other. The difference is who the limit protects — liability protects your balance sheet, UM/UIM protects your body and your income.
Check whether your policy stacks, and whether your state allows it. Stacking multiplies the per-person limit by the number of insured vehicles, and where it applies it is the cheapest coverage on the page — a second car frequently doubles the available limit for no additional UM premium. Several states prohibit it outright and many policies contain an anti-stacking endorsement that buys it away in exchange for a lower rate. It is a single line on the declarations page.
Read the rejection. If your limit is zero, someone signed something. Rejection requirements are strict in many states, and where a valid written rejection cannot be produced, the coverage is often deemed to have been issued at the liability limit. That is worth knowing before assuming you have none.
Model the injury you fear, not the one you expect. UM/UIM is tail coverage. A sprain costs nothing much; a spinal injury with permanent restriction and a career change costs more than the calculator's defaults. Run the severe case, because the moderate case is affordable by definition.
Remember property damage is separate. Uninsured motorist property damage, where offered, covers your vehicle when an uninsured driver hits it — otherwise that falls to your own collision coverage, with the deductible and settlement worked out in the total loss settlement calculator and the trade-off priced in the deductible break-even calculator.
State law controls, and it varies more here than anywhere else on the policy
Whether UM/UIM is mandatory, whether it stacks, whether it is reduced by the liability payment, whether you must exhaust the at-fault driver's limits first, whether your carrier must consent before you settle with the at-fault driver, and how a rejection must be documented are all matters of state statute and case law. The two conventions modelled here are the common shapes, not a complete map. Read your policy and, for a live claim, take advice in your own state.
Assumptions worth knowing about
- The out-of-pocket maximum resets each plan year. An injury spanning a calendar-year boundary can cost you two maximums; the calculator applies one.
- Health plan subrogation is not modelled. Many plans assert a lien on your injury recovery for what they paid, which can consume a substantial part of a settlement before you see it.
- Disability benefits often have a dollar cap and a waiting period. A stated 60% replacement can be much less in practice for a high earner, and nothing at all during the elimination period.
- The general damages multiplier is a negotiating heuristic. It is not a legal formula, it is not used by any court, and reasonable practitioners disagree about it. Set it to zero to see the economic exposure alone.
- Per-person and per-accident limits both apply. The calculator works with the per-person limit; if more than one person in your household is injured in the same crash, the per-accident cap binds instead.
- Consent-to-settle clauses matter. Most UIM policies require the carrier's consent before you accept the at-fault driver's limits. Settling first without it can forfeit the UIM claim entirely.
How UM/UIM sits alongside your other coverages
UM/UIM is the last coverage in a sequence, and knowing the order stops you from double-counting. Medical bills go to your health plan first, or to medical payments coverage or personal injury protection where your state has it. Lost income goes to disability coverage. What remains — the deductible and out-of-pocket layer, the excluded care, the unreplaced wages, and the non-economic damages nothing else pays — is the UM/UIM claim.
That ordering is why raising other coverages can reduce the UM/UIM limit you need. A health plan with a low out-of-pocket maximum and a disability policy replacing a large share of income both shrink the exposure directly, and both are usually cheaper per dollar of protection than adding UM/UIM. Conversely, a high-deductible health plan raises the number this calculator produces.
The comparison worth doing before you buy is between an extra layer of UM/UIM and an extra layer of anything else. Because UM/UIM only pays when the other driver is uninsured or underinsured, its expected cost to the carrier is low, which is why its premium is typically a small fraction of the liability premium at the same limit. Ask for the price at each tier rather than assuming the increment is proportional — it rarely is.
Finally, keep the review annual. A raise increases the wage exposure; a change of health plan moves the out-of-pocket maximum; adding a vehicle changes the stacked limit; moving state can change the offset convention entirely. None of those prompts a call from anyone, and each of them changes the answer.