If you've got uninsured motorist (and/or underinsured motorist) car insurance coverage, here's how claims typically work after a car accident with an at-fault driver who has no car insurance, or whose policy limits won't cover your losses.
If you have uninsured motorist (UIM) coverage, you'd use it if you are hit by a driver who carries no car insurance, and the accident is deemed to be that driver’s fault. (Learn more about fault for a car accident).
It's not usually worth it to file a personal injury lawsuit against someone who caused your car accident but carries no insurance, unless you're fairly certain that the person has significant assets, or there's some other way of satisfying a court judgment in your favor. The more prudent route is to make a claim against your own insurance company, under your uninsured motorist (UIM) coverage. Most states don't require vehicle owners to carry UIM coverage; it's usually an add-on when you purchase your policy.
Underinsured driver coverage comes into play when you are hit by a driver is deemed at fault for the crash, but whose liability insurance policy limits won't cover your medical bills, your pain and suffering, and other losses stemming from the crash. In that situation, you would make a claim against your own insurance company up to the limit of your underinsured motorist coverage, but only if your underinsured driver coverage is greater than the negligent driver’s policy limits.
Let’s take an example. Let’s say that the value of your injury case is $200,000, but the negligent driver only has $100,000 of coverage. In that case, you can make an underinsured motorist claim against your own insurer as long as you have more than $100,000 in underinsured coverage. If you had $150,000 in underinsured driver coverage, you would settle with the negligent driver for $100,000, and would settle with your insurer for $50,000. You cannot take the negligent driver’s $100,000 policy and another $100,000 from your policy. You can only take from your underinsured coverage that amount that exceeds the negligent driver’s coverage.
Another important thing to know about uninsured and underinsured driver coverage is that those coverages cannot exceed the amount of your primary coverage. For example, if you have $100,000 in liability coverage (which kicks in when you are at fault for an accident), you can only carry up to $100,000 in uninsured or underinsured coverage. That’s just a business decision for insurers. Uninsured and underinsured coverage is very cheap compared to regular liability coverage, so insurers don’t want their clients purchasing only the minimum liability coverage and then loading up on uninsured and underinsured coverage.
If you have reason to believe that the driver who hit you is uninsured, you should give your insurer notice as soon as possible, letting them know that you intend to file an uninsured claim. Learn more about reporting an incident to your insurance company.
Some car insurance policies place strict deadlines when it comes to notification of potential uninsured claims. Don’t delay. If the other driver tells you they don't have car insurance, or, if they refuse to give you any insurance information, and you can’t get the insurance information in any other manner, inform your insurer immediately that you intend to file an uninsured motorist claim.
An underinsured motorist claim will generally take a little longer to develop, at least until your medical treatment progresses and you and your lawyer get an understanding of the value of your car accident case. But once you or your lawyer believe that your case is worth more than the defendant’s liability coverage, inform your insurer immediately that you intend to make an underinsured motorist claim.
In general, an uninsured or underinsured driver claim progresses in the same way as a regular car insurance claim, except that the claim is against your own insurance company. There will be pretrial investigation, disclosure of your medical records, and depositions of witnesses. But one very important difference is that, if you and the insurer cannot agree on a fair settlement figure, you cannot file a lawsuit against your insurer.
Instead, you have to submit your claim to binding arbitration, which is a more informal procedure than a court trial. An arbitration is a hearing in front of a neutral arbitrator (or sometimes a panel of three arbitrators), who will consider all evidence, hear from both sides, and decide who wins. The down side of binding arbitration is that, unlike a court trial, the losing side in an arbitration has very limited rights of appeal. Basically, the losing side in car accident arbitration is usually stuck with the decision.
Learn more about what to expect in your car accident injury case.