What Is UM/UIM Coverage?
Your Safety Net When Others Don't Have Insurance
UM/UIM coverage protects you when someone else causes an accident but doesn't have insurance (or doesn't have enough). Your policy steps in to pay what the at-fault driver should have paid.
Uninsured Motorist (UM)
Covers you when the at-fault driver has NO insurance at all.
Example: An uninsured driver runs a red light and hits you. Your UM coverage pays for your injuries.
Underinsured Motorist (UIM)
Covers you when the at-fault driver has insurance, but not enough to cover your damages.
Example: Driver has $25K in coverage but your injuries cost $75K. Their insurance pays $25K first, then your UIM pays the difference up to your limit.
UM vs UIM: Know the Difference
Uninsured Motorist (UM)
The at-fault driver has NO insurance at all.
Complete Example:
The Setup: You're stopped at a red light. An uninsured driver rear-ends you at high speed.
Your Injuries: $80,000 in medical bills, lost wages, and pain/suffering
Your UM Coverage: $100,000
What Happens: Your UM coverage pays up to $80,000 (your full damages)
Underinsured Motorist (UIM)
The at-fault driver has insurance, but NOT ENOUGH to cover your damages.
Complete Example:
The Setup: At-fault driver T-bones you at an intersection
Your Injuries: $75,000 in total damages
Their Insurance: Only $25,000 liability limit
Your UIM Coverage: $100,000
Payment Order:
- Their insurance pays their full limit: $25,000
- Your UIM pays the difference: $50,000
- Total you receive: $75,000
EXAM TRAP: UIM Trigger Rule
UIM only kicks in AFTER the at-fault driver's insurance pays their full limit first! If they have any insurance available, they must exhaust their coverage before your UIM applies.
What Qualifies as an "Uninsured Motor Vehicle"?
No Liability Policy
A motor vehicle with no bodily injury liability bond or policy in effect at the time of the accident
Hit-and-Run Vehicle
The driver flees the scene - their identity and insurance status are unknown
Insurer Denies Coverage
The at-fault vehicle has insurance, but the insurer denies coverage for the loss
Insurer is Insolvent
The at-fault driver's insurance company goes bankrupt and can't pay claims
Hit-and-Run Coverage Note
For hit-and-run claims, you typically must report the accident to police within a specified time period (often 24 hours) and may need to prove physical contact occurred.
How UM/UIM Coordinates with Medical Payments (Med Pay)
Two Different Coverages That May Apply
Medical Payments (Part B) and UM/UIM (Part C) are separate coverages that can both respond to the same accident, but they work differently.
Medical Payments (Part B)
- No-fault coverage - pays regardless of who caused the accident
- Quick payment - no need to determine liability
- Limited amount - typically $1,000 to $10,000
- Medical bills only - doesn't cover lost wages or pain/suffering
UM/UIM Coverage (Part C)
- Fault-based coverage - only pays if other driver is at fault
- Slower payment - requires establishing liability
- Higher limits - typically matches your liability limits
- Full compensatory damages - medical bills, lost wages, pain/suffering
Complete Coordination Example
The Setup:
An uninsured driver hits you. You suffer serious injuries.
Your Coverage:
- $5,000 Medical Payments (Part B)
- $50,000 Uninsured Motorist (Part C)
Your Total Damages:
- Medical bills: $40,000
- Lost wages: $15,000
- Pain and suffering: $5,000
- Total: $60,000
How Payments Work:
- Med Pay pays first: $5,000 (immediately, no-fault)
- UM coverage then evaluates: You have $60,000 in damages
- UM payment depends on policy offset provisions:
- Option A - With Offset: UM pays $45,000 ($50,000 limit minus $5,000 Med Pay already paid)
- Option B - Without Offset: UM pays full $50,000 (Med Pay is separate benefit)
Total Recovery:
- With offset policy: $50,000 total ($5,000 Med Pay + $45,000 UM)
- Without offset policy: $55,000 total ($5,000 Med Pay + $50,000 UM)
Note: Most policies include an offset provision to prevent double recovery for the same expenses.
Who Is an Insured Under Part C?
1. You and Family Members
Covered while occupying or when struck as pedestrians
2. Any Other Person
While occupying your covered auto
3. Any Person Entitled to Recover
Anyone legally entitled to recover damages because of bodily injury to an insured (such as a spouse's loss of consortium claim)
What UM/UIM Coverage Pays For
Compensatory Damages
Pays damages the insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury.
Covered:
- + Medical expenses
- + Lost wages
- + Pain and suffering
- + Other compensatory damages
NOT Covered:
- - Punitive damages
- - Exemplary damages
- - Property damage (in most states)
Property Damage Note
Standard UM/UIM coverage is for bodily injury only. Property damage from uninsured motorists is typically covered under Collision (Part D) with your deductible.
UM/UIM Exclusions
UM/UIM Coverage Does NOT Apply To:
Settlement Without Consent
Any claim settled without the insurer's consent (they lose their subrogation rights)
Vehicle Owned by You/Family
Injuries caused by an uninsured vehicle owned by you or a family member
Vehicle Available for Regular Use
Vehicle furnished or available for regular use (not listed on declarations)
Public/Livery Conveyance
While using covered auto as public or livery conveyance
Workers Compensation
Claims covered under workers comp or similar law
Punitive/Exemplary Damages
UM/UIM doesn't pay punitive or exemplary damages
Stacking: Combining Limits for More Protection
What Is Stacking?
Stacking allows you to combine (or "stack") UM/UIM limits from multiple vehicles on your policy to increase your available coverage. Not all states allow stacking, and it typically costs more.
Stacked Coverage
You CAN combine limits from all vehicles on your policy.
Example:
You have:
- Car #1: $50,000 UM/UIM
- Car #2: $50,000 UM/UIM
- Car #3: $50,000 UM/UIM
An uninsured driver hits you:
Your damages: $120,000
With Stacking: You can stack all three limits = $150,000 total coverage
Your UM pays: $120,000 (full damages covered)
Unstacked Coverage
You CANNOT combine limits - only the limit of the vehicle involved applies.
Same Example:
You have:
- Car #1: $50,000 UM/UIM
- Car #2: $50,000 UM/UIM
- Car #3: $50,000 UM/UIM
An uninsured driver hits you:
Your damages: $120,000
Without Stacking: Only the limit for Car #1 applies = $50,000 total coverage
Your UM pays: $50,000 (you're underinsured by $70,000)
Key Points About Stacking:
- Costs more: Stacked coverage has higher premiums
- State-dependent: Not all states allow stacking
- Policy choice: You must elect stacked coverage when you buy the policy
- All vehicles count: Stacking applies to all vehicles on the same policy
Limits & Dispute Resolution
Limits of Liability
UM/UIM limits work like liability limits:
- Per person limit for each person injured
- Per accident limit for all injuries in one accident
- Often "stacked" or "unstacked" options available
Arbitration
If you and your insurer can't agree on:
- Whether you're entitled to damages
- The amount of damages
The dispute may be resolved through arbitration.
No Double Recovery
The insurer won't pay more than its share if other insurance or coverage applies. No duplicate payments for the same loss.
Other Insurance & Coordination
Pro Rata Sharing:
If other collectible insurance applies, the insurer pays its proportionate share based on limits.
For Nonowned Vehicles:
UM/UIM coverage is EXCESS over any other collectible insurance.
Exam Trap Alerts
UIM trigger rule: UIM only kicks in AFTER the at-fault driver's insurance pays their full limit first!
Med Pay coordination: Most policies offset Med Pay payments from UM/UIM to prevent double recovery for the same expenses.
Stacking availability: Not all states allow stacking. When available, it increases premiums but provides more coverage.
Hit-and-run = uninsured: A phantom vehicle that flees is treated as uninsured.
Insolvent insurer = uninsured: If the at-fault driver's insurer goes bankrupt, that vehicle is considered uninsured.
Bodily injury only: Standard UM/UIM covers injuries, NOT property damage.
No punitive damages: UM/UIM only pays compensatory damages.
Settlement without consent: If you settle with the at-fault party without your insurer's OK, you lose UM/UIM coverage.
Arbitration: Disputes about coverage or amounts can go to arbitration.