What Is Underinsured Motorist Coverage?
Underinsured motorist coverage helps protect you if you are injured in a car accident caused by a driver whose insurance is insufficient to cover your eligible damages. Instead of paying all your expenses yourself, you may be able to use your own policy to recover some of the remaining costs.
For example, another driver causes an accident that results in substantial medical bills and lost income. Their liability insurance pays only part of your damages because their policy limit is too low. If you have underinsured motorist coverage, your policy may help cover eligible remaining losses, subject to state law and your coverage limits.
This protection is often abbreviated as UIM coverage. It can be particularly valuable because even an insured driver may not carry enough insurance to pay for a serious accident.
What Does Underinsured Motorist Coverage Pay For?
Coverage depends on your policy and state regulations, but it may help pay for several types of losses.
Medical Expenses
Underinsured motorist bodily injury coverage may help pay eligible medical costs resulting from an accident caused by an underinsured driver. These costs can include hospital treatment, doctor visits, and rehabilitation.
Lost Wages
If your injuries prevent you from working, coverage may compensate you for eligible lost income. The amount depends on your damages, policy terms, and applicable law.
Pain and Suffering
In states and policies where permitted, UIM bodily injury coverage may compensate you for pain, suffering, and other eligible non-economic damages.
Injuries to Passengers
Depending on the policy, covered passengers may also qualify for compensation when injured in an accident caused by an underinsured driver.
Vehicle Damage
Some states offer underinsured motorist property damage coverage. However, UIM coverage does not automatically pay for car repairs everywhere. Check whether this protection is available under your policy. Collision coverage may help pay for damage to your vehicle regardless of the other driver’s insurance limits, subject to your deductible and policy terms.
How Does Underinsured Motorist Coverage Work?
Imagine another driver causes an accident, and your eligible damages total $75,000. The other driver’s insurance pays $25,000, leaving $50,000 in uncovered damages.
Your own UIM policy may help cover some of that remaining amount. However, the payment depends on your coverage limit, state rules, the policy’s method of calculating benefits, and any applicable offsets.
Some states use a difference-in-limits approach, while others use a difference-in-damages approach. These rules can produce different results, so you should not assume your policy will automatically pay the full difference.
Underinsured vs. Uninsured Motorist Coverage
These coverages protect against different situations, although insurers often offer them together.
| Feature | Underinsured Motorist | Uninsured Motorist |
|---|---|---|
| Other driver’s insurance | Exists but is insufficient | Missing or otherwise qualifies as uninsured |
| Main purpose | Helps cover eligible remaining damages | Helps cover eligible losses caused by an uninsured driver |
| Medical expenses | May be covered | May be covered |
| Lost wages | May be covered | May be covered |
| Vehicle damage | Depends on state and policy | Depends on state and policy |
Both coverages can reduce the financial impact of accidents caused by drivers who cannot adequately compensate you.
What Are the Coverage Limits?
Your UIM limit is the maximum amount available under the applicable coverage, subject to the policy’s terms and state law. Some policies use separate limits for bodily injury per person and per accident.
For example, a policy listed as $50,000 per person and $100,000 per accident generally establishes separate maximums for individual injuries and all covered bodily injuries from one accident. The actual payment may be lower depending on damages, other insurance payments, and applicable rules.
When choosing limits, consider your savings, income, health insurance, and the potential cost of a serious accident. Higher limits may offer more protection, although they can increase your premium.
Is Underinsured Motorist Coverage Required?
Requirements vary by state. Some states require underinsured motorist coverage, while others require insurers to offer it or allow drivers to purchase it voluntarily.
The rules may also differ for bodily injury and property damage coverage. If you move to another state or change insurers, review your state’s requirements and your policy documents.
Do not assume the minimum required coverage will be enough to protect you financially after a serious accident.
How to File an Underinsured Motorist Claim
If an underinsured driver injures you, take these steps:
- Report the accident. Contact the police when appropriate and notify your auto insurer promptly.
- Get medical attention. Keep records of treatment, bills, and any ongoing care related to the accident.
- Document your losses. Save evidence of lost income, vehicle damage, and other relevant expenses.
- Review the other driver’s coverage. Your insurer may need details of the at-fault driver’s liability limits and payments.
- Contact your insurer before settling. Some policies require notice or consent before you settle with the other driver’s insurer. Failing to follow these rules can affect your claim.
- Submit supporting documents. Provide requested records and ask your insurer to explain its coverage decision.
Claim deadlines and procedures vary, so act promptly and follow your policy requirements.
Is Underinsured Motorist Coverage Worth It?
Underinsured motorist coverage may be worthwhile if you want additional protection against medical expenses and other eligible losses after an accident caused by a driver with inadequate insurance.
It can be especially useful if you drive frequently, carry passengers, or would struggle to pay substantial expenses from your own savings. Compare available limits and costs, and consider how UIM coverage works alongside health insurance, personal injury protection, and collision coverage.
Final Thoughts
Underinsured motorist coverage can help bridge the gap when an at-fault driver’s insurance cannot adequately cover your eligible accident-related damages. Depending on your policy and state, it may help with medical expenses, lost wages, pain and suffering, and certain property damage.
Before selecting coverage, review your limits, state requirements, claim procedures, and settlement rules. The right policy can provide an additional layer of financial protection when another driver’s insurance falls short.
Frequently Asked Questions
Does Underinsured Motorist Coverage Pay for Medical Bills?
It may help pay eligible medical expenses caused by an accident involving an underinsured driver, subject to policy limits and state law.
Does Underinsured Motorist Coverage Pay for Car Repairs?
Only if applicable property damage coverage is available and included. Collision coverage may be another option for repairing your vehicle.
Can I Use Underinsured Motorist Coverage if the Other Driver Has Insurance?
Yes. It is designed for qualifying situations where the at-fault driver’s liability insurance is insufficient to cover eligible damages.
Is Underinsured Motorist Coverage the Same as Liability Insurance?
No. Liability insurance generally pays for injuries or damage you cause to others. Underinsured motorist coverage may protect you and other covered people when another at-fault driver has insufficient insurance.
How Much Underinsured Motorist Coverage Should I Buy?
Choose limits based on your financial exposure, available options, and state requirements. Consider discussing suitable limits with a licensed insurance professional.