Uninsured/Underinsured Motorist Coverage & Legal Compensation
State laws generally require vehicle owners to maintain a minimum amount of liability insurance, and these requirements vary considerably. Liability insurance is generally meant to cover injuries and property damage that an at-fault driver causes to others. When a driver has only the legally required minimum coverage, there is a risk that the policy will not fully compensate victims with serious injuries, particularly those involving long-term care or permanent disabilities. Many drivers remain uninsured or carry insufficient policy limits, leaving victims and their families vulnerable to substantial out-of-pocket expenses.
Uninsured and Underinsured Motorist Coverage
Uninsured Motorist coverage, often known as UM, applies if an at-fault driver has no liability insurance. Underinsured Motorist coverage, or UIM, is relevant when the at-fault driver’s liability insurance policy limits are too low to pay for the full extent of damages. Many at-fault drivers lack significant assets, making them effectively judgment-proof even if a legal judgment is awarded against them.
In many states, insurers are required to offer UM/UIM protection to people purchasing auto insurance. UM and UIM policies can provide compensation for economic losses, such as medical expenses and lost income, as well as certain non-economic losses, such as pain and suffering, where permitted by law. When a victim’s own insurer covers their losses under their own auto policy, these payments are known as first-party benefits.
Hit and Run and UM Claims
A driver who causes an accident and flees the scene may be classified as an uninsured motorist for the purposes of a UM claim. Most policies and state regulations require that the policyholder promptly report the incident to law enforcement and the insurance company. Some policies also stipulate that there must be evidence of physical contact between the claimant’s vehicle and the fleeing vehicle. Without this evidence, coverage for a hit and run scenario may be unavailable under some policies or in some states.
Uninsured Coverage for Property Damage
UM coverage can be separated into bodily injury and property damage protection. Uninsured Motorist Property Damage, or UMPD, helps pay for vehicle repairs or replacement if an uninsured driver causes damage. However, UMPD coverage is not offered or required in every state. In states where UMPD is available, policy limits and exclusions may differ from those governing bodily injury coverage.
Who Is Covered by UM/UIM Plans
UM/UIM coverage typically extends to the policyholder and resident relatives of the same household. It also generally protects passengers in the insured vehicle at the time of an accident. In many cases, it covers a policyholder or resident relatives who are injured as pedestrians or bicyclists by an uninsured or underinsured motorist. If a policy includes Medical Payments coverage, or if the state requires Personal Injury Protection (PIP) insurance, UM/UIM benefits typically come into play after those benefits have been exhausted or to address categories of damages not covered by PIP or MedPay.
Policy Limits, Stacking, and Subrogation
Insurance companies generally limit UM/UIM coverage to amounts that do not exceed the policyholder’s own liability limits. In some states and under specific policy language, UM/UIM limits can be “stacked,” meaning coverage from different vehicles or separate policies can be combined for a single accident. Where stacking is allowed, the total amount of available insurance can increase substantially. After paying a UM/UIM claim, insurers often have a right to pursue reimbursement or subrogation against the at-fault driver or that driver’s insurer to recover the amounts they have paid.
Comparative and Contributory Negligence
Fault laws vary among states, and an individual’s degree of fault can influence whether they qualify for benefits under their UM/UIM coverage. In pure comparative negligence states, a claimant can typically recover a percentage of damages corresponding to the at-fault driver’s share of responsibility. In modified comparative negligence jurisdictions, recovery can be barred if the claimant’s own share of fault meets or exceeds a threshold. In contributory negligence states, a claimant who bears any portion of fault may be barred from recovering damages. These variations affect how UM/UIM carriers evaluate claims, including whether they reduce or deny payment.
Filing a UM/UIM Claim
When an accident occurs involving an uninsured or underinsured motorist, an injured person should notify their insurance carrier as soon as reasonably possible. Insurance policies usually impose specific deadlines for notice and may require prompt cooperation with the insurer’s investigation. The insurance company is responsible for conducting a fair and timely review of the claim. If an insurer unreasonably denies coverage, unnecessarily delays payment, or engages in adversarial tactics without proper justification, it may be acting in bad faith. Policyholders may have a separate cause of action based on bad faith if the insurer fails to meet its legal obligations.
