When most people think about car insurance, they focus on liability coverage (protecting others if they cause an accident) or collision coverage (protecting their own vehicle). But there’s another, less talked-about type of coverage that can make or break your financial recovery after a serious accident: underinsured motorist coverage (UIM).
As attorneys, we often meet clients after the fact- when it’s too late to change their coverage. Here’s what every driver should know about UIM before they find themselves in that position.
What Is Underinsured Motorist Coverage, and Why Does It Matter?
UIM coverage protects you when you’re injured in an accident caused by someone who has insurance, but not enough of it.
For example:
- The other driver carries the state minimum liability coverage (often as low as $25,000).
- Your medical bills and lost wages add up to $100,000.
- Their policy only covers $25,000. Without UIM, you’re left covering the remaining $75,000 on your own.
With UIM, your own policy steps in to cover the shortfall, up to the limits you’ve purchased. This is crucial because:
- Medical costs are skyrocketing. A short hospital stay can easily exceed most state minimum liability policies.
- Many drivers are underinsured. While most states require liability insurance, minimum limits are outdated and don’t reflect the real cost of injuries.
- Financial security. UIM is essentially protection for you and your family, not just your car.
How It Works in Practice
If you’re hit by a driver who doesn’t carry enough insurance, you typically must first collect from their insurance company up to their policy limits. After that, you file a claim under your own UIM coverage for the balance. It’s important to note:
- UIM coverage doesn’t always “stack.” Whether you can add together multiple policies or vehicles depends on the wording of your policy and your state’s laws.
- You need to know your own limits. If you carry only $50,000 in UIM coverage, but your injuries cost $200,000, you’ll still face a shortfall.
- State rules matter. Every state has its own laws that affect whether UIM is required, how it applies, and what rights you have in a dispute.
Legal Tips for Protecting Your Rights in UIM Claims
Understanding your coverage is important, but protecting your rights under that coverage requires careful legal steps. These are key considerations:
- Never settle too quickly. If you accept payment or sign a release with the at-fault driver’s insurer without your own insurer’s consent, you may lose the ability to pursue UIM benefits later.
- Preserve documentation. Keep all accident reports, medical records, wage loss statements, and communications with insurers. These serve as critical evidence in proving damages.
- Watch the deadlines. UIM claims are subject to strict notice requirements and statutes of limitation. Missing a deadline may prevent recovery altogether.
- Be prepared for disputes. Insurers often challenge the extent of injuries or argue damages are excessive. Legal representation helps ensure your claim is properly presented.
- Consider bad faith. If your insurer delays, denies, or undervalues your claim without a valid reason, you may have a separate legal claim for bad faith, which can provide additional remedies beyond policy limits.
Examples of State-Specific Rules
While the principles of UIM coverage are the same everywhere, here are a couple of examples of how states handle it differently:
- In Illinois: Uninsured motorist (UM) coverage is required by law and must match your liability coverage unless you reject it in writing. If you carry UM coverage above the state minimum, your policy must also include UIM. Illinois also requires arbitration provisions in UIM policies, meaning disputes over coverage or damages are often resolved outside of court.
- In Florida: Insurers must offer UM/UIM coverage equal to your bodily injury liability limits, but you can reject it by signing a state-approved form. Florida also allows “stacking,” meaning you can combine UM/UIM limits across multiple vehicles on your policy unless you’ve chosen non-stacked coverage. And importantly, because Florida has one of the highest rates of uninsured drivers in the country, UM/UIM coverage is often a critical layer of protection.
What You Should Do
- Check your current policy. Look specifically for “Uninsured/Underinsured Motorist Coverage.” Many people don’t even realize they have it—or don’t.
- Match your liability limits. A good rule of thumb is to purchase UIM coverage equal to your liability coverage. If you protect others for $250,000, you should protect yourself the same way.
- Ask questions. Don’t assume your agent automatically added UIM. In many states you can reject it, sometimes with just a quick signature, but that decision can leave you exposed.
- Consult an attorney after an accident. If you’re injured and suspect the other driver is underinsured, talk to a lawyer before settling. Insurance companies have every incentive to minimize what they pay.
Final Thoughts:
Underinsured motorist coverage is not about being cautious- it’s about being realistic. You can’t control who hits you, how much insurance they bought, or how serious your injuries may be. But you can control whether you have a safety net in place.
If you only take one step after reading this, make it this: review your auto policy today and make sure your UIM coverage is sufficient. Depending on where you live—Illinois, Florida, or elsewhere—the rules may differ, but the need for protection is universal.
At Kelleher & Holland, LLC, we regularly guide clients through these very challenges. From protecting rights during settlement negotiations to pursuing bad faith claims, our attorneys ensure that underinsured motorist coverage works the way it should- for you, not against you.
Contact us today to schedule a consultation and ensure you and your family are fully protected under the law.