Is Uninsured/Underinsured Motorist Coverage Right for Your Business?

AUGUST 5, 2025

Most businesses that carry commercial auto insurance include uninsured/underinsured motorist (UM/UIM) coverage on their policies without understanding exactly what this coverage provides. It can cover bodily injury (and depending on the state, property damage) suffered from an accident caused by a driver who is not insured; or if the driver who causes the accident is insured, it can provide additional protection when their limits of liability have been exhausted. 

This coverage can be beneficial because of the high number of uninsured drivers. However, some businesses may elect to not carry UM/UIM coverage, or only carry statutory minimum limits where required, because coverage such as workers’ compensation and personal auto policies are typically available to injured employees.

There are several factors to consider when deciding whether to purchase UM/UIM coverage. It’s important to work with a broker that can conduct a detailed review of your exposures and the pros and cons of purchasing this type of coverage.

Should Business Owners Buy More Than the Statutory Limits for UM/UIM Coverage? 

As mentioned above, most claimants are covered by other types of insurance. Therefore, businesses may choose to either purchase only the statutory minimum limits, or to carry no coverage in states that permit the insured to reject UM/UIM coverage.

Example of a reason to not carry coverage: An employee is driving for work and gets struck by an uninsured motorist. Since this employee is driving within the scope of their work, the workers’ compensation policy would respond. In most states, an employee can’t file a claim under both workers’ compensation and UM/UIM; therefore, workers’ compensation should be the sole remedy.

However, in other instances, a business may wish to carry UM/UIM coverage and even consider purchasing limits beyond the statutory requirements.

Example of a reason to carry coverage: A company owner who drives a company vehicle gets t-boned at an intersection and misses work for three months with permanent injuries. Because the owner was exempt from the workers’ compensation coverage, the UM/UIM coverage would provide financial relief for the medical bills, lost income, and pain and suffering they endured (in states where allowed). 

Does Your Business Need UM/UIM Coverage?

Whether you should purchase UM/UIM coverage depends on how your vehicles are used and other coverage available to you. If you’re concerned that other coverage may not be available, or you believe the cost of UM/UIM coverage is worthwhile as a benefit, then you can choose to buy coverage above the statutory limits.

However, if you’re confident that other coverage will be available (e.g., workers’ compensation, personal auto UM/UIM, medical, disability, etc.), then you could consider purchasing only statutory limits or even rejecting the coverage entirely if that’s an option — which can reduce or eliminate your premium.