What's the Big Deal About Underinsured Motorist Coverage?

Posted on 15th April, 2022 - by OZ Law

What's the Big Deal About Underinsured Motorist Coverage?

This month, I would like to shed some light on an often misunderstood aspect of your car insurance: underinsured/uninsured motorist coverage. Everyone has it because it's required under the California Insurance Code, but not everyone has as much coverage as they should or understands how vital it can be if they are injured in an accident.

First, let's define what each term means:

  • Underinsured motorist coverage (UIM) applies when you are injured by a negligent driver who is "underinsured" for your loss.
  • Uninsured motorist coverage (UM) applies when a driver has no insurance coverage at all.

Every policy issued in California is required to provide coverage for both.

How Does UIM/UM Coverage Work?

Consider the following example: you are in an accident caused by someone else, and you are taken by ambulance to UC Davis and receive a full trauma work up. Your ambulance and emergency room bills alone might be in excess of $20,000, even if you sustained no lasting injury and received no further treatment.

If the responsible driver has the mandated state minimum liability policy, there is only $15,000 available from that policy to cover your damages, meaning the driver is "underinsured."

How Can You Protect Yourself?

Luckily, you can protect yourself against the underinsured/uninsured driver with your own policy:

  • Your UIM/UM coverage kicks in anytime your policy limit is greater than the responsible driver's policy limit.
  • It will pay out up to your higher limit or the full amount of your darn ages, whichever is less.

So, in my example above, if you have an underinsured limit of $100,000 (the minimum limit I recommend), your policy would pay the difference between the defendant's $15,000 limit and the full amount of your damages, up to an additional $85,000.

If the driver had no insurance whatsoever (i.e., was "uninsured"), you could recover up to $100,000 from your own policy. And to put your mind further at ease, there is no negative consequence to using your UIM/UM coverage. If the accident was not your fault, you are entitled to use this coverage without any effect on your premiums or eligibility for future coverage.

When Do You Need A Lawyer's Help?

Why is a lawyer often necessary to recover this "benefit?" Your company is not required to pay you more than your claim is worth.

When you and your insurance company don't "see eye to eye," your remedy under the Insurance Code is to submit the case to a binding arbitration to determine value.

An arbitration is just like a trial but without the jury. Witnesses testify under oath and evidence is submitted much the same way it is in court.

A skilled personal injury attorney can mean the difference between full compensation and a low ball settlement.

The bottom line is that you should carefully review your UIM/UM coverage limit with your insurance agent and carry the highest limit you can reasonably afford. It may be the only protection you have if you are hurt in an accident.