Uninsured/Underinsured Motorist Claims

The Uninsured Driver Problem

An estimated 33 million drivers on US roads — approximately 14% — carry no auto insurance at all. Uninsured driver rates vary dramatically by state: Mississippi leads at 29%, while New Jersey has the lowest rate at 3%. Even insured drivers frequently carry only state minimum liability limits, which can be as low as $15,000 per person in some states — grossly insufficient for covering serious injury claims.

When you are injured by an uninsured or underinsured driver, the at-fault driver's lack of coverage does not eliminate your legal claim — you still have a valid negligence claim. However, collecting a judgment against an uninsured individual is often impractical because they lack assets to satisfy the judgment. This makes your own uninsured/underinsured motorist (UM/UIM) coverage the practical path to compensation.

How UM/UIM Coverage Works

Uninsured motorist (UM) coverage applies when the at-fault driver has no insurance or in hit-and-run situations where the driver cannot be identified. Underinsured motorist (UIM) coverage applies when the at-fault driver has insurance but their limits are insufficient to cover your damages. Most UM/UIM policies provide the same limit as your bodily injury liability coverage, though you can often purchase higher UM/UIM limits.

UIM coverage operates differently depending on your state. In "offset" or "difference in limits" states, your UIM coverage only pays the difference between the at-fault driver's policy limit and your UIM limit. In "add-on" or "excess" states, your UIM coverage adds on top of whatever you recover from the at-fault driver's policy. The add-on approach provides significantly more total coverage. Understanding which system your state uses is essential for evaluating the total compensation available.

Filing UM/UIM Claims Against Your Own Insurer

UM/UIM claims are filed against your own insurance company, but the relationship is adversarial despite being your own insurer. Your insurer has a financial incentive to minimize the payout and will evaluate your claim much like a third-party liability claim. You must prove that the other driver was at fault, that they were uninsured or underinsured, and document your injuries and damages just as you would in any personal injury claim.

An important distinction: most states require you to obtain your insurer's consent before settling with the at-fault driver's insurance company if you intend to pursue a UIM claim. Settling with the at-fault driver's insurer without your own insurer's consent can extinguish your UIM claim because it may destroy your insurer's subrogation rights. Your attorney must coordinate the settlement sequence to preserve all recovery options.

Stacking and Other Coverage Considerations

In states that permit "stacking," you can combine UM/UIM limits from multiple vehicles on your policy or from multiple policies in your household. For example, if you have two cars on your policy with $100,000 UM coverage each, stacking would give you $200,000 in available coverage. Some states allow inter-policy stacking (combining coverage from different household members' policies), further increasing available limits.

UM/UIM coverage is mandatory in approximately 20 states and must be offered (but can be rejected in writing) in most others. Reviewing your auto insurance policy to understand your UM/UIM limits, whether stacking is permitted, and whether your state uses offset or add-on methodology is important insurance planning. Purchasing UM/UIM limits equal to or exceeding your liability limits is one of the most valuable insurance investments drivers can make.