UM/UIM Coverage: What Is It All About?

Uninsured Motorist coverage gives us a lot to talk about, so we would like to start at the very beginning, so that you understand exactly what it is and how some of the issues surrounding it affect you, your insureds, and your business.

The VERY Beginning

The first thing to know is that UM and UIM coverage are designed to protect drivers. Uninsured Motorist (UM) coverage is designed for when an accident occurs and the at-fault party does not have liability insurance. Underinsured Motorist (UIM) coverage is very similar. It is designed for instances in which the at-fault party has insurance, but not enough to cover the damage they have caused. Here, the insurance carrier steps in to act as the third party’s carrier. That means all UM/UIM claims are first party claims. Plaintiffs submit them to their own insurance providers, as opposed to the provider of the at-fault party.

For those in search of coverage, UM and UIM insurance are sometimes offered separately, but very often come bundled.

Is UM/UIM Coverage Required?

Not in every state. In Texas, for example, it is not. However, even in states where it is not required, insurance providers must offer it to their customers. Many insurers will include it in their policies automatically, and in these instances, insureds will need to reject the coverage in writing.

Texas requires UM/UIM coverage of $30,000 per occurrence and $60,000 per accident, which is the matching limit to the Bodily Injury (“BI”) coverage requirement of $30,000 per occurrence and $60,000 per accident.  You cannot have more UM/UIM than BI coverage. For a list of UM/UIM requirements by state, please visit the following link.


The Case for UM/UIM Coverage

In 2018, it was estimated that nearly 13 percent of drivers had no auto insurance. That number translates to roughly one out of every eight drivers. That may not seem very high, but picture a highway during a morning commute, clogged with vehicles changing lanes and zipping in and out of traffic. An accident with an uninsured driver is not some abstract concept with little chance of being realized. Drivers could very easily find themselves in a situation in which UM/UIM coverage could save thousands of dollars.


When You Are the One Who Is Uninsured

Driving without insurance is a bad idea. Yes, anecdotally it is not as if people are getting into accidents every day. Theoretically, an individual could drive for years without auto insurance and never run into any problems. But even a minor fender-bender can bring a hefty price tag. The reason for that is, insurance or not, when a driver causes an accident, they are still liable for the damage they cause and the people they hurt. And all of this is before we have gotten to their own vehicle and injuries. In addition, because liability insurance is legally required*, they can be punished for not having it, with penalties including fines and even jail time.

In our next article, we will examine some of legalities surrounding UM/UIM cases in Texas.

*As of this writing, New Hampshire does not require residents to carry liability insurance. However, it still holds drivers responsible, should they cause an accident.