You did everything right after your accident. You got the other driver's insurance information, filed your claim, and waited for compensation. Then came the bad news: the at-fault driver only has minimum coverage that won't begin to cover your medical bills. This is where underinsured motorist (UIM) coverage becomes essential.

What Is Underinsured Motorist Coverage?

Underinsured motorist coverage is insurance that pays the difference when an at-fault driver's liability limits are too low to cover your damages. Unlike uninsured motorist coverage (which applies when a driver has no insurance), UIM coverage applies when the other driver has some insurance, but not enough.

For example, if you have $100,000 in damages and the at-fault driver only has a $25,000 policy limit, your UIM coverage could pay up to your policy limit to cover the $75,000 gap.

Why UIM Coverage Matters

Many drivers carry only state minimum liability coverage, which can be as low as $25,000 per person in some states. A serious accident can easily result in medical bills exceeding $100,000. Without UIM coverage, you'd be left paying the difference out of pocket—or going without compensation entirely.

Consider these scenarios where UIM coverage proves critical:

  • Multiple surgeries and extended hospital stays
  • Long-term rehabilitation or physical therapy
  • Permanent injuries requiring ongoing care
  • Significant lost wages from extended time off work

How UIM Claims Work

Filing an underinsured motorist claim involves several steps:

First, you must exhaust the at-fault driver's policy limits. This typically means settling with their insurance company for the full amount available. Get your UIM insurer's consent before settling—most policies require this, and failing to do so could jeopardize your UIM claim.

Once you've collected from the at-fault driver's insurance, you file a claim with your own insurance company under your UIM coverage. Your insurer will evaluate your remaining damages and pay up to your UIM policy limit.

UIM Coverage Requirements by State

States handle UIM coverage differently:

  • Some states require UIM coverage as part of every auto policy
  • Other states make it optional but require insurers to offer it
  • Some states allow you to reject UIM coverage in writing

Check your policy declarations page to confirm you have UIM coverage and verify your limits. If you don't have it, consider adding it—the cost is typically modest compared to the protection it provides.

Stacking UIM Coverage

Stacking allows you to combine UIM limits from multiple vehicles or policies. If you have two cars on your policy, each with $100,000 UIM coverage, stacking could give you $200,000 in total UIM protection.

Not all states allow stacking, and some policies specifically prohibit it. Review your policy language or ask your agent whether stacking applies to your coverage.

Disputes with Your Own Insurer

UIM claims can become adversarial. Remember, you're now making a claim against your own insurance company, and they have financial incentive to minimize your payout. Common disputes include:

  • The value of your damages
  • Whether your injuries are related to the accident
  • The reasonableness of your medical treatment
  • Calculation of lost wages and future expenses

Many UIM policies include arbitration clauses requiring disputes to be resolved through binding arbitration rather than court.

Timing and Deadlines

UIM claims have their own deadlines separate from your claim against the at-fault driver. Your policy may require you to file the UIM claim within a specific timeframe—often shorter than the statute of limitations for the underlying accident.

Don't wait until you've fully resolved the liability claim to notify your UIM carrier. Put them on notice early, even if you haven't settled with the other driver yet.

Conclusion

Underinsured motorist coverage can mean the difference between full compensation and financial hardship after a serious accident. Review your policy now, before an accident happens. If you're already dealing with an underinsured driver, consult an attorney before settling with the at-fault driver's insurance—improper handling of the liability settlement can affect your UIM claim.