Understanding Uninsured and Underinsured Motorist (UM/UIM) Coverage

The Problem UM/UIM Coverage Solves

You purchase auto insurance, drive carefully, and still get seriously injured by a driver who either has no insurance at all or carries minimum coverage that doesn't come close to covering your medical bills. This is an alarmingly common scenario — approximately 1 in 8 drivers in the US is uninsured, and millions more carry only minimum liability limits.

Uninsured motorist (UM) and underinsured motorist (UIM) coverage exists to protect you in exactly these situations — by ensuring that your own policy fills the gap when the at-fault driver's coverage is absent or inadequate.

Uninsured Motorist (UM) Coverage

UM coverage pays your damages when you're injured by a driver who has no insurance at all, or in a hit-and-run accident where the at-fault driver cannot be identified. Your own insurance company steps into the shoes of the uninsured driver's insurer.

UM coverage is required in about half of US states and optional (but strongly recommended) in the others. Coverage limits are typically expressed the same way as BI coverage — per person / per accident.

Underinsured Motorist (UIM) Coverage

UIM coverage pays the difference between the at-fault driver's BI liability limits and your actual damages, up to your UIM policy limits. It applies when the at-fault driver has some insurance, but not enough to fully compensate you.

How UIM Stacking Works

Example: At-fault driver has 25/50 BI coverage. Your damages are $150,000. You carry $100,000 in UIM coverage. The at-fault driver's insurer pays $25,000. Your UIM coverage then pays up to $100,000 of the remaining balance — bringing total recovery to $125,000. (The exact calculation varies by state and policy stacking rules.)

Key Differences Between UM and UIM

• UM: Applies when the at-fault driver has no insurance (or hit-and-run)
• UIM: Applies when the at-fault driver has insurance, but less than your damages

Some states require that UM and UIM limits match your BI liability limits unless you explicitly opt for lower limits in writing. This is called mandatory equal limits or 'stacking requirements.'

Filing a UM/UIM Claim

Filing a UM/UIM claim is different from filing a standard third-party claim. You're filing against your own insurer, which can create a different dynamic. While your insurer owes you a duty of good faith, UM/UIM claims are often aggressively contested. Key steps:

1. Notify your insurer promptly after the accident
2. Exhaust or settle the at-fault driver's BI coverage first (required in most states before triggering UIM)
3. Provide documentation of your damages to your own insurer
4. Negotiate for full UM/UIM limits if warranted by your injuries

Bad Faith in UM/UIM Claims

Your own insurer owes you a contractual and legal duty to handle your claim in good faith. If your insurer unreasonably denies or low-balls a UM/UIM claim, you may have a bad faith claim against them in addition to the underlying UM/UIM claim. Bad faith claims can result in damages beyond the policy limits.

If you've been injured and have UM/UIM questions, check your eligibility for assistance here.

Frequently Asked Questions

Does filing a UM/UIM claim raise my premiums?

In most states, filing a UM/UIM claim does not increase your rates because you were not at fault. However, this varies by insurer and state. Ask your agent.

What if I was a passenger when a hit-and-run occurred?

As a passenger, you may have access to UM coverage under the vehicle you were in, under your own auto policy (if you have one), or potentially under both. The rules vary by state and policy language.