Underinsured Motorist Rates Remain High Across the US

Recent findings by the Insurance Research Council (IRC) reveal a concerning trend: a significant portion of U.S. drivers carry auto liability insurance limits insufficient to cover damages and injuries they cause in accidents. In 2022, approximately 15.7% of drivers were underinsured, a figure consistent with the elevated levels seen since 2020. The underinsured motorist (UIM) rate shows substantial regional variation, from as low as 5.6% in the District of Columbia to a staggering 40.9% in Colorado. Other states with notably high UIM rates include Nevada, Georgia, Louisiana, and Kentucky.

The study utilized data from major insurers covering about half of the U.S. private passenger auto insurance market to estimate the ratio of UIM-to-bodily injury (BI) claim frequencies. This ratio provides a reliable measure of the frequency of injury-producing accidents where the at-fault driver’s liability limits are exceeded. The analysis underscores the need for adequate uninsured (UM) and underinsured motorist coverage, which compensates victims when damages surpass the at-fault driver’s coverage limits.

Despite a temporary dip in UIM claim frequencies during the early pandemic due to reduced driving, rates returned to pre-pandemic levels by 2022. The persistence of high UIM rates reflects the combined effects of riskier driving behaviors, a litigious society, and economic inflation. The data suggests a growing necessity for drivers to reassess their insurance coverage to ensure sufficient protection against potential financial liabilities from accidents.