Underinsured Motorist Coverage

Underinsured motorist (UIM) coverage is an auto insurance add-on that protects you when an at-fault driver’s liability policy isn’t large enough to pay your medical bills or vehicle repairs. It fills the gap between the other driver’s coverage limit and your actual expenses, up to your UIM policy limit.

How it works

• After an accident caused by another driver, you first seek payment from the at-fault driver’s insurer.
• If that policy’s limits don’t cover your medical costs, lost wages, or vehicle damage, your UIM coverage can pay the remaining eligible amounts up to your UIM limit.
• UIM typically has two components:
• UIM bodily injury — medical bills, potentially lost wages and pain-and-suffering (depending on your policy and state law).
• UIM property damage — repair or replacement cost for your vehicle (not available in all states).
• You cannot claim more than the actual losses caused by the accident.

Example

If the at-fault driver’s liability limit is $25,000 but your medical bills and damages total $60,000, a UIM policy with a $50,000 limit could cover up to $35,000 of the shortfall (subject to policy terms and exclusions).

Benefits

• Protects you from unexpectedly large out-of-pocket costs when another driver has insufficient insurance.
• Can cover medical treatment, lost income, and vehicle repair/replacement (where available).
• Some insurers and states allow “stacking” UIM limits across multiple vehicles or policies, increasing the total available coverage after a qualifying accident.

Where UIM is required

Some states require UIM coverage or have specific rules about it. Examples include:
– Required: Connecticut, Kansas, Maine, Maryland, Minnesota, Nebraska, North Carolina, North Dakota, Oregon, South Dakota, Vermont.
– Required under certain choices or policy types: New Hampshire, Virginia (if you buy insurance), Rhode Island (if you carry more than the state minimum liability), Illinois (when selecting higher UM limits), New Jersey (with a standard policy).

Check your state’s regulations or ask your agent for precise requirements and options.

Hit-and-run accidents

UIM generally does not apply to hit-and-run crashes because UIM addresses situations where the at-fault driver is identified but underinsured. Hit-and-runs are usually handled by uninsured motorist (UM) coverage, and you may also need collision coverage depending on your policy and state rules.

Choosing limits and costs

• Consider selecting UIM limits at least as high as your own liability limits to avoid gaps.
• Higher limits and stacking options increase protection but raise premiums. Weigh potential exposure (medical costs, vehicle value, earnings) against cost.
• Review state-specific availability: some states limit UIM to bodily injury only.

Key takeaways

• UIM coverage fills the gap when an at-fault driver’s insurance is insufficient to cover your losses.
• It commonly covers bodily injury and sometimes property damage, depending on state law.
• Some states require UIM; in others it’s optional. Stacking can increase available limits if permitted.
• Hit-and-runs are typically handled by uninsured motorist coverage, not UIM.

Underinsured motorist coverage is a practical way to reduce financial risk from serious accidents involving underinsured drivers. Review your state rules and policy options to decide the right limits for your situation.