Underinsured Motorist Insurance

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Most states have laws that provide underinsured motorist ("UIM") insurance, which allows the person covered by the insurance policy (the "insured") to recover damages if he or she is involved in an accident and the driver responsible for those injuries doesn't have sufficient insurance coverage.

There can be very significant differences in the UIM policies that are written by the various insurance companies ("insurers" or "insurance carriers"). In some states, underinsured motorist coverage is mandatory, that is, insurers must offer it to their insureds and car owners must carry it. In other states, UIM coverage is optional, or UIM coverage may apply unless the insured specifically rejects it.

In addition, the state UIM laws differ on when UIM coverage is triggered. In some states, the insured's coverage is triggered based upon terms in the insured's policy, and in some states it's based upon the policy of the driver who caused the injury (the "tortfeasor").

Because of the many differences between UIM laws and policies, it is critical that you understand the UIM laws in your area and the UIM language in your policy as well as the other driver's policy. If you've been involved in an accident with an underinsured driver, you might consider seeking the advice an experienced insurance law attorney.

Getting or Having UIM Coverage

In states with UIM laws, insurers are either required to provide or to offer UIM coverage to their insureds, or UIM coverage will be included with the policy unless the insured rejects it. In addition, most UIM laws set a "minimum" or a "maximum" amount of coverage that has to be offered or carried.

Mandatory coverage is required in several states: the insurer must give it to you. And, in these states the coverage must be in certain, specified amounts listed in the UIM laws. Also, in some of these states, the insured is permitted to buy extra UIM coverage, up to a set maximum amount.

Optional Coverage

In some states, underinsured motorist coverage is optional and does not have to be purchased by the motor vehicle driver or owner. In these states, the UIM laws provide that insurers have to "offer" UIM coverage or make it "available" to their insureds, or use words with similar meaning. UIM laws might provide that:

• Insurers must provide written notice of the availability and option for UIM coverage
• Insurers have to make the offer for UIM coverage when the insured applies for general car insurance
• Insurers have to offer UIM coverage when it offers uninsured motorist insurance coverage ("UM")

Automatic UIM Coverage

In most states, underinsured motorist coverage is automatically included in an insured's general liability car insurance, unless the insured specifically rejects it.

Most of these UIM laws require the insured to reject UIM coverage in writing, and in some states, a specific form must be used when coverage is rejected.

If UIM coverage is not rejected in the way required by the UIM law, the rejection will be ignored by the courts and UIM coverage will be read into the policy, that is, it will be assumed that the policy includes UIM coverage.

Types of UIM Laws

All of the various UIM laws provide coverage in either one of two ways:

1. UIM coverage is triggered when the insured's damages are more than the liability limits of the tortfeasor, that is, the insured's damages are more than the tortfeasor's policy will pay.
2. UIM coverage is triggered when the insured victim's UIM coverage is more than the tortfeasor's liability insurance limits available from the tortfeasor. Most UIM laws fall into this category.

What's Not Covered

"Exclusions" are specific things or persons that are not covered by an insurance policy. With respect to UIM coverage, the UIM laws allow insurers to make certain exclusions. In addition, insurers often make other exclusions in the policy, and sometimes the courts will invalidate those restrictions.

For example, UIM laws often include:

• An exclusion for claims involving an uninsured vehicle you own, or an uninsured vehicle owned by your spouse or a member of your residence. Additionally, this exclusion will often include uninsured vehicles that you use regularly, regardless of who owns them.
• An exclusion for government vehicles

UIM policies often contain:

• An exclusion that bars the insured's vehicle from qualifying as an "uninsured vehicle," but state courts vary in the enforcement of this exclusion
• An exclusion for coverage to the insured if he or she is injured while occupying or if struck by a vehicle that is owned by the insured, or his or her spouse or a member of the insured's residence, but is not listed in the insured's policy

How Much Can Be Recovered?

Although the policy limits usually define how much in UIM benefits an insured can be paid, there are several things that can increase or reduce those amounts.

Most UIM policies permit the insurer to set off or reduce UIM benefits by the amount, if any, that has been paid to the insured by the tortfeasor or his or her insurer. Some states, however, do not permit insurers to make this reduction.

Does the insured have more than one policy or more than one insured vehicle? If so, you might be able to "stack" insurance coverage. "Stacking" is when UIM provisions in multiple policies, or UIM coverage for multiple cars covered by a single policy, are added together so that the insured can recover the full amount of his or damages.

For example, if an insured has two cars covered by a UIM policy, and each car has UIM limits of $25,000, and the insured's damages are $50,000, some state UIM laws will allow the insured to stack the two UIM provisions so that he or she can recover the full $50,000.

Stacking can also come into play if the UIM law in your state does not allow the recovery of UIM benefits unless your UIM coverage is more than the limits of the tortfeasor's insurance policy. For example, your two cars are covered by a UIM policy, and each car has UIM limits of $25,000. Your damages from an accident are $50,000, but the tortfeasor's policy limit is only $30,000. Some state UIM laws will allow you to stack the two UIM provisions so that your UIM coverage is $50,000 (more than the tortfeasor's $30,000 limit), which then triggers the UIM coverage of your policy.

Again, not all states allow stacking, so you need to check your insurance policy and your state's UIM laws.

Claiming UIM Benefits

You must provide notice to the insurer if you are making a claim for UIM benefits- usually you have to provide notice of the accident and notice that you intend to make a UIM claim. You should check both your state's UIM laws and your policy for the notification requirements that apply to your situation.

Also, some states' UIM laws require the insured-victim to exhaust or "use up" the limits of the tortfeasor's insurance policy before the insured-victim can recover UIM benefits under his or her own policy. Some UIM law require the insured-victim to sue the tortfeasor and obtain a court judgment against the tortfeasor that is in amount greater than the tortfeasor's policy limits before the insured can claim UIM benefits. Again, this practice varies from state to state, so check your state's UIM laws.

Be careful about settling your claim with the tortfeasor, that is, accepting a payment from him or her as payment for your damages. Most UIM policies have a consent-to-settle clause, which provides that the insured will lose his or her rights to UIM benefits if he or she settles with the tortfeasor without the insurer's consent.

Finally, your insurance policy might require you to arbitrate your claim for UIM benefits. Arbitration is an informal process where a third-party or "arbitrator" will decide whether your UIM claim is valid, and the amount you can recover. Your policy should outline what has to be arbitrated and how the arbitration process works.

Questions For Your Attorney

How can I find out if I have underinsured motorist insurance?

Can I buy extra underinsured motorist insurance, and should I?

When I applied for my car insurance, I'm pretty sure that I rejected underinsured motorist insurance coverage. Can I get it now?

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- Uninsured Motorist Insurance
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- Finding an Insurance Lawyer
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