Uninsured and Underinsured Motorist Claims: How to Recover When They Can't Pay

Understanding the Reality of Uninsured and Underinsured Motorist Claims

Being involved in a motor vehicle accident is a traumatic experience. The situation becomes exponentially more stressful when you discover that the person who caused the collision either has no insurance or carries limits so low that they cannot possibly cover your medical bills, lost wages, and pain and suffering. This is where Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage become the most critical components of your auto policy.

Despite mandatory insurance laws in nearly every state, the Insurance Research Council (IRC) consistently finds that roughly one in eight drivers on the road is uninsured. Even more carry only the state-mandated minimums, which are often insufficient for anything beyond a minor fender bender. In a serious collision, these minimums are exhausted in minutes. This comprehensive guide will walk you through the legal mechanics of UM and UIM claims, how to navigate the process with your own insurance company, and how to maximize your recovery when the at-fault party lacks the means to pay.

1. What is Uninsured Motorist (UM) Coverage?

Uninsured Motorist (UM) coverage is a portion of your own insurance policy designed to protect you if you are hit by a driver who has no liability insurance. In the eyes of the law, your own insurance company "steps into the shoes" of the at-fault driver. They become the entity responsible for paying the damages that the other driver should have paid had they been responsible and insured.

Scenarios Where UM Applies

There are three primary scenarios where UM coverage is triggered:

1. The At-Fault Driver Has No Insurance: The driver is identified but has let their policy lapse or never had one.
2. Hit-and-Run Accidents: In most states, if you are the victim of a hit-and-run where the driver cannot be identified, they are treated as an uninsured motorist. However, many policies require "physical contact" between the vehicles to trigger this coverage.
3. Stolen Vehicles: If the vehicle that hit you was stolen, the owner’s insurance typically will not cover the thief’s liability, leaving the driver effectively uninsured.

This protection isn't just for when you are in your car. It often extends to you as a pedestrian accident victim or while riding a bicycle, provided the injury was caused by a motor vehicle.

2. Defining Underinsured Motorist (UIM) Coverage

While UM covers you when there is no insurance, Underinsured Motorist (UIM) coverage applies when the at-fault driver has insurance, but their policy limits are too low to cover the full extent of your damages. For example, if you reside in a state where the minimum liability limit is $25,000, but your medical bills alone are $100,000, that driver is "underinsured."

The "Gap" vs. "Excess" Distinction

Depending on your state law and policy language, UIM coverage usually operates in one of two ways:

• Reduction/Gap Coverage: The amount of UIM available is your limit minus what the at-fault driver’s insurance paid. If you have $50,000 in UIM and the other driver has $25,000, you can only collect an additional $25,000 from your own policy.
• Excess/Add-On Coverage: Your UIM limits are added on top of the at-fault driver’s limits. In the same scenario, you could collect the $25,000 from the other driver and then the full $50,000 from your own policy, totaling $75,000.

Understanding which type of policy you have is vital for determining fault and liability and calculating the eventual value of your case.

3. The Legal Requirement for UM/UIM Coverage

State laws vary significantly regarding whether UM and UIM coverage are mandatory. In some states, like New York or South Carolina, UM coverage is a legal requirement. In others, like Texas or California, insurance companies are required to offer it, but consumers can opt out by signing a written waiver.

Why You Should Never Reject This Coverage

Rejecting UM/UIM is one of the most common mistakes drivers make when trying to lower their monthly premiums. The cost of adding this coverage is typically negligible compared to the financial protection it provides. If you are injured by an uninsured driver and do not have UM coverage, you may be left with no source of recovery other than suing the individual personally. Since most uninsured drivers have little to no assets, a personal judgment is often uncollectible, leaving you to bear the financial burden of your injuries alone.

4. Establishing Fault in UM/UIM Claims

Just because you are filing a claim with your own insurance company does not mean they will automatically pay. To recover under a UM or UIM policy, you must still prove that the other driver was at fault for the accident. Your insurance company will investigate the claim just as vigorously as if they were the other driver's insurer.

Evidence Needed to Prove Liability

To succeed, you generally need to provide:

• Police Reports: Documentation from the scene showing the other driver was cited or at fault.
• Witness Statements: Independent accounts of how the crash occurred.
• Photos and Video: Evidence from the scene, including dashcam footage or surveillance from nearby businesses.
• Expert Analysis: In complex cases, accident reconstruction experts may be needed to prove the mechanics of the collision.

If the insurance company believes you were partially at fault, they may attempt to reduce your settlement based on comparative negligence laws. This makes understanding car accident settlements and liability essential for protecting your rights.

5. Types of Damages You Can Recover

UM/UIM coverage is designed to compensate you for the same types of damages you would recover from a standard liability policy. These are generally divided into economic and non-economic damages.

Economic Damages

These are measurable financial losses, including:

• Medical Expenses: Past, present, and future hospital bills, surgeries, physical therapy, and medication.
• Lost Wages: Compensation for time missed at work due to your injuries.
• Loss of Earning Capacity: If your injuries prevent you from returning to your previous career or working at all.

Non-Economic Damages

These are more subjective and harder to quantify, but often represent the largest portion of a settlement:

• Pain and Suffering: Compensation for physical pain and emotional distress.
• Loss of Enjoyment of Life: If you can no longer participate in hobbies or activities you once loved.
• Disfigurement and Scarring: Damages for permanent physical changes.

In some tragic cases, if an accident results in a fatality, UM/UIM coverage can also provide benefits for funeral expenses and loss of companionship, similar to a wrongful death claim.

6. UM/UIM for Motorcycles and Special Vehicles

Motorcyclists are at a much higher risk of sustaining catastrophic injuries in a collision. Unfortunately, many motorcycle policies exclude UM/UIM unless specifically added by the rider. Given the high cost of medical care following a bike wreck, this coverage is arguably more important for riders than for car drivers.

Detailed guidance on these specific risks can be found in our motorcycle injury recovery handbook, which outlines how riders can navigate the unique insurance challenges they face.

Rideshare Considerations

If you are a passenger in an Uber or Lyft, or a driver for these platforms, insurance becomes even more complex. Companies like Uber provide UM/UIM coverage for passengers and drivers while a trip is in progress. However, the limits and applicability can change depending on the "period" of the ride. For more details on this, see our rideshare accident guide.

7. The Concept of "Stacking" Insurance Policies

One of the most powerful tools in a UM/UIM claim is "stacking." This allows a policyholder to combine the limits of multiple insurance policies or multiple vehicles on a single policy to increase the total amount of coverage available.

Intra-Policy Stacking

This occurs when you have multiple vehicles insured on one policy. For example, if you have three cars insured with $50,000 in UM coverage each, some states allow you to "stack" those limits for a total of $150,000 in coverage for a single accident.

Inter-Policy Stacking

This occurs when you are covered under two different policies. For instance, if you are injured in a friend's car, you might be able to use the friend's UM coverage first and then "stack" your own personal UM coverage on top of it if your damages exceed the friend's policy limits.

Note: Stacking is not allowed in every state. Some states expressly prohibit it, while others allow insurance companies to include "anti-stacking" language in their contracts. It is vital to have an attorney review your policy to see if this option is available to you.

8. Step-by-Step Guide to Filing a UM/UIM Claim

Filing a claim against your own insurance company can feel like a betrayal, but it is a contractual right you have paid for. Here is the general process:

1. Report the Accident Immediately: Notify your insurance company that an accident occurred, but do not provide a recorded statement until you have consulted with counsel.
2. Verify the Other Driver's Status: Confirm with the police or the other driver's carrier that they are indeed uninsured or underinsured.
3. The "Consent to Settle" Rule: This is the most dangerous trap in UIM law. In many states, you must obtain your own insurance company's written permission before you settle with the at-fault driver's insurance. If you sign a release with the at-fault driver without this permission, you may waive your right to pursue a UIM claim entirely.
4. Submit Proof of Loss: You will need to provide medical records, bills, and proof of lost wages to your insurer to justify the value of the claim.
5. Negotiation: Your insurer will likely make a low-ball initial offer. You or your attorney will then negotiate for a figure that reflects the true value of your damages.

9. When Your Insurance Company Acts in Bad Faith

When you file a UM/UIM claim, your insurance company has a fiduciary duty to handle your claim fairly and in good faith. However, because they are the ones who have to pay the check, their interests are inherently conflicted.

Signs of Insurance Bad Faith

• Unreasonably denying a claim without a proper investigation.
• Intentionally delaying payment of a valid claim.
• Misrepresenting policy language to avoid paying.
• Offering a settlement that is grossly lower than the evidence supports.

If your insurer acts in bad faith, you may be entitled to damages above and beyond your policy limits, including punitive damages and attorney fees. This is a highly specialized area of law that requires expert legal intervention.

10. State-by-State Variations in UM/UIM Law

Because insurance is regulated at the state level, the rules for UM/UIM can change drastically the moment you cross a state line. For example:

| State | UM/UIM Requirement | Stacking Allowed? |

| :--- | :--- | :--- |

| Florida | Optional (but must be offered) | Yes (unless waived) |

| Texas | Optional (must sign waiver) | No |

| New York | Mandatory | No |

| Pennsylvania| Optional (must sign waiver) | Yes |

| California | Optional (must sign waiver) | No |

In some states, you can only collect UIM if your limits are higher than the at-fault driver's limits. In others, you can collect any amount of damages up to your limit that the at-fault driver could not pay. Always consult a local expert to understand the specific statutes of limitations and filing requirements in your jurisdiction.

11. Common Misconceptions About UM/UIM Claims

Many people hesitate to file UM/UIM claims due to several persistent myths:

"My Rates Will Go Up"

In many states, it is illegal for an insurance company to raise your premiums for an accident that was not your fault. Since UM/UIM claims only trigger when someone else is at fault, your rates should generally remain stable. Check your state's specific insurance statutes.

"I'm Suing My Own Insurance Company"

While it may eventually result in a lawsuit if they refuse to pay, the process starts as a claim. You aren't "suing" them for being bad; you are simply asking them to fulfill the contract you have been paying for every month.

"The Insurance Company is on My Side"

Even though you are their customer, the adjuster's job is to save the company money. They are professional negotiators who will look for reasons to minimize your injuries or shift blame onto you.

12. Factors That Influence Your Settlement Value

Determining the value of a UM/UIM claim involves the same complexity as commercial trucking accident claims, though the insurance caps are usually lower. Key factors include:

• Total Policy Limits: You cannot recover more than the stated limit of your policy (unless stacking applies or bad faith is proven).
• Severity of Injury: Permanent disabilities, surgeries, and traumatic brain injuries (TBIs) command much higher settlements than "soft tissue" injuries like whiplash.
• Venue: Certain counties or states are known for being more "plaintiff-friendly," which can drive up settlement offers.
• Your Percentage of Fault: If you were 20% at fault, your recovery will be reduced by 20% in most states.
• Pre-existing Conditions: The insurance company will comb through your medical history to argue that your current pain is actually from an old injury.

13. The Role of an Attorney in UM/UIM Cases

While you can technically handle a UM/UIM claim yourself, it is rarely advisable. An attorney provides several critical services that usually result in a higher net recovery, even after legal fees:

• Policy Analysis: Finding hidden coverage or stacking opportunities you might miss.
• Managing the "Consent to Settle" Process: Ensuring you don't accidentally waive your rights.
• Medical Coordination: Helping you find specialists who can document your injuries properly for legal purposes.
• Litigation Strength: If the insurance company refuses to be fair, an attorney can file a lawsuit and take the case to arbitration or trial.

Because most personal injury lawyers work on a contingency fee basis, you don't pay anything upfront. They only get paid if they successfully recover money for you.

14. Frequently Asked Questions (FAQ)

Can I file a UM claim if I was a passenger in someone else's car?

Yes. Generally, the insurance follows the vehicle first. You would first look to the driver's UM policy. If that is exhausted, you may then be able to use your own UM policy from your personal car at home.

What if I am hit by a driver from another state?

Usually, the laws of the state where the accident occurred will govern the liability, but your own policy's language (from your home state) will govern how your UM/UIM benefits are paid.

Is there a deadline for filing a UM/UIM claim?

Yes. This is often governed by the statute of limitations for contracts or personal injury, depending on the state. It can range from one to six years, but you should notify your insurer immediately to avoid a "late notice" defense.

Does UM coverage pay for my car repairs?

Not always. UM coverage usually comes in two parts: Uninsured Motorist Bodily Injury (UMBI) and Uninsured Motorist Property Damage (UMPD). You must have the UMPD portion to cover vehicle repairs, or use your own collision coverage.

15. Conclusion: Protecting Your Future with a Free Case Evaluation

Navigating the world of Uninsured and Underinsured Motorist claims is a legal minefield. One wrong signature or a missed deadline can cost you tens of thousands of dollars in much-needed compensation. When an at-fault driver doesn't have the assets or insurance to cover the damage they've caused, your own insurance policy is your only safety net—but that net only works if you know how to deploy it.

If you have been injured in an accident with an uninsured or underinsured driver, don't leave your recovery to chance. Your insurance company has teams of lawyers looking out for their bottom line; you deserve a team looking out for yours.

Contact us today for a free case evaluation. We will review your policy, analyze the facts of your accident, and help you understand the true value of your claim so you can focus on what matters most: your recovery.