How to Protect Yourself Against Uninsured Drivers

How to protect yourself against uninsured drivers involves adding uninsured or underinsured motorist protection coverage to your policy. This coverage will protect you against uninsured drivers by paying for damages and medical costs that would normally be covered by their insurance in an at-fault accident. There is a difference between uninsured and underinsured, so read your policy carefully to make sure you have the right coverage to protect yourself against uninsured drivers.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: May 3, 2021

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While all states require that drivers have some form of insurance, not everyone chooses to obey the law. It can seem like a cut and dry case if you are hit by an uninsured motorist but many times it is not and there are always extenuating circumstances that can be involved. Take for example the recent ruling in South Dakota. There was a lawsuit that challenged the owned but not insured exclusion in insurance policies. Wheeler v. Farmers Mutual Insurance Company of Nebraska added South Dakota to the list of states that will not allow an insurance company to limit coverage based on owned but not insured exclusions.

What Does This Mean?

When an individual buys uninsured motorist coverage, they are basically buying a safety net which protects them from uninsured or underinsured drivers on the roads. If you get hit by someone like this, your policy will cover for damages that would normally be covered under the other person’s insurance had they been insured. Some insurance companies will try to get out of paying damages by claiming that even though someone is insured under the uninsured motorist policy that they bought, if they are hit by a car that isn’t included in this coverage, the insurance company is not responsible for paying damages. This is increasingly becoming challenged by many states and insurance companies are finding themselves having to pay out claims regardless because courts are ruling their argument as invalid.

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The South Dakota Case

This was the first case South Dakota had to deal with in the case of “owned but not insured” exclusion. Wheeler, a woman, was driving a car that was owned by her father when she was hit by a drunk and injured. Her injuries were deemed severe and she needed some type of compensation. The driver that hit her was not insured. Normally, this is where uninsured motorist coverage would come into play but it’s also where the situation gets sticky. Because the vehicle the woman was driving was owned by her father, they paid the limits of his uninsured motorist policy but because the young lady’s injuries were so severe, his uninsured motorist policy didn’t cover the entire amount of the accident cost.

She then consulted her mother’s insurance company to try to tap into her uninsured motorist benefits and even though the young woman was insured under her mother’s policy, the vehicle was not. Therefore, the insurance company denied her claim based on the “owned but not insured exclusion.” This was because the young woman was driving her father’s car. The parents were divorced. The woman involved in the accident didn’t take no for an answer and sued the insurance company, claiming that the “owned but not insured” exclusion was not applicable in South Dakota.

The Ruling

Ultimately, the court ruled in the young woman’s favor. The wording of the statute played d a major role in determining their decision. Claims Journal reports that “the underinsured motorist coverage statue states that cover is, ‘subject to the terms and conditions of the policy. The uninsured motorist coverage statue, however, does not include any similar language subjecting the uninsured motorist to the terms and conditions of the policy.” The fact that the same policy language was not in the uninsured clause was ruled intentional and therefore, the court case went in the favor of the young woman. Other states have not ruled the same way and have voted in favor of the “owned but not excluded policy. One of these states is Utah. In a Clark v. State Farm Mutual Automobile Insurance Company, they found that the insurance primarily rests with the vehicle and not the person that is necessarily named on the insurance policy. This can make you rethink how your insurance policy is set up.

What That Means For You

While the ruling in the South Dakota case was primarily based on language inconsistencies, court justices acknowledged this. Insurance companies and consumers alike should take note of how their insurance policies’ language can affect different lawsuit outcomes and familiarize themselves with how this directly translates into understandable terms. The first step is to make sure that you are protected by adding an uninsured /underinsured coverage to your insurance policy. What this will do is pay for any injuries that occur to you or your passengers if you are hit by an uninsured motorist.

Uninsured and underinsured are two different things and it’s important to understand the distinction. Uninsured drivers are those that have no insurance. Hit and runs can also count as uninsured claims because you have no idea who hit your car. Underinsured motorists are those who do have insurance policies but cannot legally pay all of the financial consequences of an accident because they lack the appropriate amount of insurance. The Insurance Information Institute (III) vice president Carolyn Gorman says, “You absolutely need this coverage because if you get into an accident with someone who is driving without insurance or doesn’t have enough of it, you want to be made financially whole again. You have to protect yourself fiscally and physically and uninsured/underinsured motorist protection can help you in that regard.”

Gorman is right. Getting into an accident can be a very stressful time period in your life and if you are hit by someone who doesn’t’ have insurance, it can be a much bigger headache. Even if you think you are insured properly, it is always a good idea to sit down with your agent to get them to interpret the legal language that makes up your policy. If you completely understand how your insurance will look at an accident, in the event that something happens, you will understand the best route to take to make sure everyone is protected.

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