Injured by a driver with minimal insurance? Learn how to increase your compensation with underinsured motorist coverage.
Car accidents happen in the blink of an eye and can leave you with a wrecked car, significant injuries, and mounting bills.
When you’ve been in a vehicle collision caused by someone else, you have a right to expect the other driver’s auto insurance to pay for your damages.
All but one state in the U.S. requires drivers to carry at least a minimum amount of auto liability insurance. ¹
But what if the at-fault driver doesn’t have enough insurance to pay the full value of your claim?
When the cost of your medical bills, lost wages, and pain and suffering exceed the other driver’s insurance limits, your auto policy might cover the difference.
Underinsured motorist coverage (UIM) comes into play when the other driver doesn’t have enough insurance to cover your damages. Here’s what you need to know.
Why Underinsured Motorist Coverage is Important
In no-fault insurance states, the injured person must rely on their Personal Injury Protection (PIP) before filing a liability claim with the at-fault driver’s liability insurance. In “tort” states, the injured person relies on the at-fault driver’s liability insurance to cover their injury-related damages.
Most states require drivers to carry minimum auto insurance of no less than $25,000 in bodily injury (BI) liability coverage per person. BI liability helps cover an injured person’s medical expenses, out-of-pocket expenses, lost wages, and more.
Consider the scenario where you’re involved in an accident with someone who has insurance, but not enough to cover your damages. When serious injuries keep you from working, you might be left with thousands of dollars in medical bills and related expenses after you’ve exhausted the at-fault driver’s coverage.
Severely injured car accident victims should be represented by an experienced personal injury attorney to ensure maximum compensation.
Example: Driver with Minimum Coverage Causes High-Dollar Injuries
Hank rear-ends Jane at high speed. Jane’s car is totaled, and she suffers severe neck and back injuries.
Hank carries his state’s minimum auto insurance coverage limits of $25,000 per person for bodily injury liability and $10,000 property damage liability.
Jane spends two weeks in the hospital, then undergoes a month of rehabilitation. She lost two months of income before her doctor released her to return to work.
Hank’s insurance company accepts his liability for the crash. The property damage claim for Jane’s car is paid in full.
Jane’s attorney calculated the value of her injury claim as $50,000 for Jane’s medical expenses and lost wages, with an additional amount for her pain and suffering.
Hank’s insurance company offers its $25,000 policy limits toward Jane’s injury compensation.
Jane could sue Hank for the rest of her damages, but he’s a young man with a low-paying job and no assets.
Jane could be on the hook for thousands of dollars in unpaid medical bills unless she has underinsured motorist coverage on her auto policy.
How Underinsured Motorist Coverage (UIM) Works
Underinsured motorist (UIM) coverage pays for costs that result from an accident caused by a driver who has too little insurance to cover all your damages.
UIM coverage for you and your passengers can cover:
- Medical bills
- Out-of-pocket expenses like crutches and medications
- Replacement costs like child care or lawn mowing
- Lost wages
- Pain and suffering
Fourteen states require motorists to carry underinsured motorist coverage in addition to minimum limits of liability coverage and uninsured motorist coverage.
Some states, like West Virginia, require insurance companies to offer optional underinsured motorist coverage to policyholders in amounts equal to their liability coverage. The policyholder must sign a “waiver” to reject the UIM coverage.
Uninsured Motorist (UM) coverage protects you if you’re involved in an accident with an at-fault driver who has no auto insurance.
Underinsured Motorist (UIM) coverage protects you if you’re involved in an accident with an at-fault driver who has insufficient auto insurance to cover the cost of your damages.
Depending on state requirements, your insurance company may bundle together two or more uninsured and underinsured motorist coverages:
- Underinsured Motorist Bodily Injury (UIMBI)
- Underinsured Motorist Property Damage (UIMPD)
- Uninsured Motorist Bodily Injury (UMBI)
- Uninsured Motorist Property Damage (UMPD)
Your state may only require the insurance company to offer UM and UIM coverage for bodily injury claims.
Example: High-Dollar Injuries Covered by Victim’s UIM Coverage
Let’s take a look at the last example, where Hank rear-ends Jane’s car at high speed. Jane suffers severe injuries, incurring more than $50,000 in medical bills and lost wages.
Hank has a low-paying job and no assets. He carries his state’s minimum insurance requirement of $25,000 for bodily injury liability and $10,000 for property damage.
Jane’s auto insurance policy has liability limits of $100,000 per person for bodily injury and matching limits of $100,000 for uninsured and underinsured bodily injury coverage.
While Jane was recovering, her attorney notified both insurance companies that Jane suffered serious injuries from an accident caused by Hank. The attorney put Hank’s insurance company on notice of Jane’s liability claim and put Jane’s insurance company on notice of a potential UIM claim.
Hanks insurer tendered their liability limits of $25,000. Because Hank’s insurance was insufficient to cover all of Jane’s damages, her attorney filed an underinsured motorist claim on Jane’s behalf.
Jane’s attorney argued that Jane’s injury claim was worth $75,000 for Jane’s medical bills, lost wages, and her significant pain and suffering.
Accounting for Hank’s $25,000 liability limits, Jane’s attorney demanded the remaining $50,000 from her underinsured motorist coverage. After a few days of negotiations, Jane’s UIM claim settled for $45,000.
Because Jane had underinsured motorist coverage, she wasn’t saddled with thousands of dollars in unpaid bills.
UIM Claims Must Be Processed in Good Faith
Many drivers assume that UIM benefits will automatically kick in whenever they’re involved in an accident with an underinsured motorist. Rarely, if ever, will your insurance company voluntarily write you a check.
Like any other business, an insurance company is out to make money. Insurance adjusters are trained to minimize or deny insurance claims, even when the policyholder is the claimant.
The adjuster will question the necessity of your medical treatment, dismiss your pain and suffering, and use other negotiation tactics to delay settling an underinsured motorist claim.
Your insurance company may even defend the uninsured driver’s position to limit the amount of money that it will pay to you.
However, insurance companies have a legal duty to handle insurance claims fairly and in good faith. If your insurance adjuster violates that duty, you may have grounds for a bad faith claim against the insurance company.
The responsibility of good faith essentially means that a party to a contract must be fair and honest when dealing with the other party in the agreement.
Your insurance policy is a legally binding contract. When you file an underinsured motorist claim, it’s a “first party” claim on your insurance agreement with the company.
In the underinsured motorist injury claim process, your insurer should be fair and prompt in responding to your claim. Your insurer owes you a duty to take a reasonable approach to evaluate and attempt to resolve the claim. An insurer that violates this duty is acting in “bad faith.”
Examples of bad faith tactics include:
- Using a biased “expert” to value a claim
- Asking for additional documentation for the sole purpose of delaying the processing of the claim
- Ignoring the claimant’s calls or letters
- Imposing difficulties for a claimant to file a claim
- Delaying payment for no good reason
Do You Have a UIM Claim?
If you get into an accident with an uninsured driver, you know pretty much immediately that you should make an uninsured motorist claim.
But if you’re injured in an accident caused by a driver with valid insurance, it’s not always obvious that you’ll need to make an underinsured claim.
Example: Difficulties in Knowing When a Driver is Underinsured
John runs a red light, crashing into the side of Amy’s car. The impact caused Amy’s head to slam into her side window, leaving her with cuts and bruises to her face, and a serious concussion.
John was cited for speeding, and admitted to the investigating officer that he was texting when the collision occurred.
Amy contacted John’s insurance company and also notified her own insurer of the crash.
Within the first few weeks after the accident, Amy had no idea as to the true extent of her injuries. Her concussion was a traumatic brain injury that kept her out of work for eight weeks. By then she also learned she would need reconstructive surgery to repair the jagged scar on her forehead.
Amy had no way of knowing that John only carried his state’s minimum of $20,000 in bodily injury liability coverage. She only knew that the adjuster from John’s company was pestering her to take a quick $10,000 settlement with “no questions asked.”
In time, Amy came to find that she incurred $30,000 in medical bills and lost wages. Her reconstructive surgery would cost an additional $10,000.
John was significantly underinsured.
How and When Can You Make a Claim?
Almost every auto policy has a Notice of Occurrence and Cooperation clause. The clause means you agree to tell your insurance company when you’re in an accident, and you agree to cooperate with your insurance company’s accident investigation.
The clause will look something like this:
“Insured (you) agrees to notify the insurer (your insurance company) of any accidents and thereafter comply with all information, assistance, and cooperation which the insurer reasonably requests, and agrees that in the event of a claim the insurer and the insured will do nothing that shall prejudice the insurer’s position…”
Failure to tell your insurance company about an accident is a violation of your contract that could cause your insurance company to deny an underinsured motorist claim.
Policyholders are often given as little as 30 days to determine whether there is a need for a UIM claim. Unless you’ve quickly recovered from relatively mild injuries, your insurer should be notified that you might have to make an underinsured motorist claim.
Attorneys Handle Complicated Claims
If an attorney represents you, your attorney will handle all communications with both insurance companies.
An underinsured motorist claim proceeds in much the same way as a standard car insurance claim. One main difference is that the claim you’re making is against your own insurance company rather than the other party’s.
Underinsured motorist claims can be complicated. Just because the other company paid their limits doesn’t mean your adjuster won’t argue about the value of your claim.
The adjuster will look for any reason to deny or reduce an underinsured motorist settlement. They might argue that the alleged “at-fault” driver did not actually cause the accident, or that you shared blame for your injuries.
Further, an insurer can deny a claim based on the fact that your injuries were due to a pre-existing condition. A pre-existing condition is a health issue or injury that you had before the accident.
The insurance company might even hire their own doctor to dispute the severity of your injuries or your need to be off work.
Don’t Settle for Less
While all of these are legitimate reasons for an insurer to deny or reduce a claim, you should never assume that the denial is valid in your specific situation. An experienced personal injury attorney knows how insurance adjusters work and will be ready to fight back on your behalf.
Your attorney can get information you can’t easily get on your own, like the at-fault driver’s policy coverage. Your attorney can navigate any complexities or uncertainties with your claim and the filing process.
Most attorneys will offer free consultations for car accident victims. Personal injury attorneys usually work on a contingency fee basis, meaning they don’t get paid unless your claim settles or you win an award in court.
It costs nothing to find out what a good attorney can do for you.
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