Underinsured Motorist (UIM)
Kicks in when the at-fault driver has insurance — just not enough to cover your injuries.
Underinsured motorist coverage answers a narrower problem than uninsured motorist coverage does. Here the at-fault driver does have insurance. It simply runs out before the injuries do, and UIM covers part of what is left, from your own policy.
How much is left is where states differ sharply. Under one common approach, often called difference in limits, your UIM limit is reduced by whatever the at-fault policy already paid, which also means the coverage does nothing unless your limit is higher than the other driver's. Under another, often called excess or add-on, your UIM limit sits on top of that payment. The same numbers can produce very different totals depending on which rule the state and the policy language follow.
There is usually a sequence to follow. The at-fault driver's bodily injury liability limit generally has to be exhausted first, and many policies require the insurer's consent before a claimant settles with the other side.
UIM is normally sold alongside uninsured motorist coverage and printed together as UM/UIM on the declarations page. Limits are typically capped at the policy's own liability limits, so raising UIM often means raising the split limits underneath it.
Because state minimum liability limits are low across much of the country, the gap UIM addresses is common rather than exotic. A single hospital stay can pass a $25,000 limit, and the shortfall does not disappear. It becomes a debt the at-fault driver may or may not be able to pay.
In real life
Another driver runs a stop sign and your injuries total $120,000. He carries 25/50 limits, so his insurer pays $25,000 and his policy is finished. You carry $100,000 in UIM. In a difference-in-limits state, your coverage adds $75,000, which is your $100,000 less his $25,000, for $100,000 in all. In an excess state it can add up to $95,000, covering the full $120,000.
Common questions
What is the difference between uninsured and underinsured motorist coverage?
Uninsured motorist coverage applies when the at-fault driver has no policy at all, which in most states includes hit-and-run. Underinsured motorist coverage applies when that driver does have a policy but its limit is smaller than the injuries. They are usually sold as a pair and often share one limit, but they respond to two different gaps.
What happens if the other driver's insurance is not enough?
Their insurer pays up to the policy limit and stops. Anything above it is the at-fault driver's personal responsibility, which may or may not be collectable. Underinsured motorist coverage on your own policy can cover part or all of the shortfall, up to your UIM limit, and in some states that limit is reduced by what the other insurer already paid.
Do I have to settle with the other insurance before using UIM?
The at-fault policy generally has to be exhausted first, and most UIM provisions require the claimant to notify their own insurer and obtain consent before accepting a settlement. Settling without that consent can jeopardize the UIM claim, because it removes the insurer's ability to pursue the at-fault driver. The exact requirements are written into the policy and vary by state.
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Scan my policy — freeRelated terms
Definitions describe how these terms are generally used across the U.S. market. Wording, limits and exclusions vary by insurer, policy form and state — the policy you hold is what controls. See the full Insurance Glossary.