If you have uninsured motorist (UIM) coverage, it's triggered when you're involved in a car accident with 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).
We'll discuss the details of what's covered under a typical UIM policy below, but usually the idea is that by making a UIM claim with your own car insurance company, you can receive compensation for the entire spectrum of your car accident-related losses, just as you would if the at-fault driver did have insurance and you could make a claim directly against them, or against their insurer.
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. So making sure you carry uninsured motorist (UIM) coverage (even when it's not required in your state) is usually the best way to make sure you're not left without satisfactory compensation after a car accident that's not your fault.
Underinsured driver coverage comes into play when you're in an accident with a driver who is deemed at fault for the crash, and their liability insurance policy limits won't cover your medical bills, your pain and suffering, and other losses stemming from the accident. In that situation, you would make a claim against your own insurance company up to the limit of your underinsured motorist coverage, but the amount your own car insurance company will pay depends on the negligent driver's liability policy limits.
Let's take an example. Let's say that the value of your car accident case is $40,000, but the negligent driver only has $25,000 in liability coverage. In that case, you can make an underinsured motorist claim against your own insurer as long as you have more than $25,000 in underinsured coverage. So, if you have $50,000 in underinsured driver coverage, you would settle with the negligent driver for $25,000 (the limits of their liability coverage), and would settle with your own insurance company for $15,000 (through your underinsured motorist coverage).
Most often, when a car insurance policy includes something called "uninsured motorist" or "underinsured motorist" insurance, that refers to the "bodily injury" variety of these kinds of coverages. That means the following kinds of losses ("damages" in the language of the law) are typically recoverable from your own car insurance company:
In many states, your uninsured/underinsured motorist insurance can apply not just to you (as the policyholder) but also to others who aren't covered under their own car insurance. That most often includes:
Uninsured/underinsured motorist insurance may also apply to cover the policyholder and family/household members when they're injured as pedestrians or as bicyclists in a traffic accident where the at-fault driver is uninsured or underinsured.
Another important thing to know about uninsured and underinsured driver bodily injury coverage is that the coverage amounts cannot exceed the amount of your liability 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 fairly 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.
What about vehicle damage or other kinds of property loss after a car accident with an uninsured or underinsured driver? That's often a separate (and separately-purchased) coverage option.
In most states and with most car insurance companies, you'll need to purchase separate uninsured/underinsured motorist insurance when you want to make sure damage to your vehicle or other kinds of property can be compensated after an accident with an uninsured/underinsured driver. In other words, most uninsured motorist coverage doesn't cover vehicle damage, and the same goes for underinsured motorist coverage.
One important note here is that if you already carry collision coverage as part of your car insurance policy, you most likely don't need uninsured/underinsured motorist property damage coverage. But check the fine print. In California, for example, you can only use your uninsured motorist property damage (UMPD) when the uninsured driver can be identified (so you can't use UMPD in California if your car was damaged after a hit and run accident with an unknown driver, for example). Learn more about using collision and comprehensive coverage after a car accident.
From a state car insurance coverage requirement standpoint, it depends on where you live. A number of states require vehicle owners to carry uninsured and/or underinsured motorist protection as part of any car insurance policy, including:
District of Columbia
In most of the states listed above, you're required to carry uninsured/underinsured motorist coverage in the same amounts as your liability coverage, or at certain minimum dollar amounts. But as we touched on above, the amount of your uninsured/underinsured motorist protection usually can't exceed the policy limits of your standard liability coverage.
In many states where uninsured/underinsured motorist coverage isn't required as part of a car insurance policy, insurance companies are required to offer those coverage options as add-ons to customers, but a customer is free to decline uninsured/underinsured driver insurance (usually in writing or by initialing the policy paperwork). In California, for example, if you choose not to buy uninsured/underinsured motorist coverage when you purchase a car insurance policy, you must sign a form called a "waiver" stating that you were offered the coverage, and decided to turn it down.
But perhaps a more important point here is that, state car insurance requirements aside, carrying sufficient uninsured/underinsured motorist coverage is simply the best (and cheapest) way to make sure all your financial bases are covered after a car accident.
There are a a lot of uninsured drivers out there (around 12 percent of all motorists are uninsured, according to the Insurance Information Institute). And plenty more drivers choose to carry the bare minimum liability coverage requirements in their state (often as low as $15,000 per person injured in an accident). Especially after a serious crash, it's pretty easy to exceed coverage limits. Having your own coverage to turn to in these situations can end up being one of the best investments you'll ever make, insurance-wise.
In general, an uninsured or underinsured driver claim progresses in the same way as a regular car insurance claim, except that the claim is filed with your own insurance company. There will be an investigation into the accident, examination of your medical records to understand the nature and extent of your injuries, and compilation of other evidence and records that might affect the value of your claim and the payment of a fair settlement.
But one very important difference between a claim against the at-fault driver and a UIM claim filed with your own insurance company is that, if you and your insurer cannot agree on a fair settlement figure, you probably won't be able to file a lawsuit against your insurer. Instead, you'll likely have to submit your claim to binding arbitration, which is a more informal procedure than a court trial, and which can limit your rights if you don't like the outcome.
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 the outcome. The downside 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.
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. If the at-fault driver is underinsured, you might need to obtain a statement from the driver's insurance company that details the coverage limits. 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 get an understanding of the value of your car accident case. But once you 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.
Learn more about what to expect in your car accident injury case.
Even though uninsured and underinsured motorist coverage are part of your own insurance policy, things may not always go as smoothly as you might expect when it comes to getting a fair resolution to your claim.
You might want to talk with an attorney to understand all your options and your best path forward if your uninsured/underinsured motorist claim has hit a snag, or when there doesn't seem to be enough insurance to cover your car accident losses.
You can connect with a lawyer using the features right on this page, or learn more about when you might need a lawyer after a car accident.