When the Other Driver is Uninsured or Underinsured
Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage protects you when you are injured by a driver who has no insurance or not enough insurance to cover your damages.
This is a first-party claim against your own auto insurance company, not the other driver’s insurer. You paid for this coverage when you bought your policy, and you have a contractual right to recover under it when the conditions are met.
| Coverage Type | When It Applies | How It Works |
|---|---|---|
| Uninsured Motorist (UM) | The at-fault driver has no insurance at all, or the policy lapsed, or it is a hit-and-run with no identified driver. | Your UM coverage pays for your bodily injury and (in some states) property damage up to your UM policy limits. |
| Underinsured Motorist (UIM) | The at-fault driver has insurance, but their liability limits are less than your damages. | You first recover the at-fault driver’s full policy limits, then your UIM coverage pays the remaining damages up to your UIM limits. |
- $25,000 from the at-fault driver’s insurer
- Up to $75,000 from your own UIM coverage (to reach your $100k limit)
UM/UIM coverage does not apply in every situation. Common exclusions and limitations:
- You were driving someone else’s car: UM/UIM usually follows the vehicle, not the driver. If the car you were in had no UM/UIM, you may not be covered (check your own policy for “non-owned vehicle” coverage).
- You were at fault: UM/UIM only applies when the other driver was at fault. If you caused the crash, your collision and med-pay coverage may apply, but not UM/UIM.
- Hit-and-run with no physical contact: Many policies require “physical contact” between your vehicle and the phantom vehicle. If the other car swerved and you crashed trying to avoid them, you may not be covered unless you have witnesses.
- You rejected UM/UIM coverage: In many states, you must affirmatively reject UM/UIM in writing when you buy your policy. If you rejected it, you have no coverage.
- You settled with the at-fault driver without consent: Most UIM policies require you to get your insurer’s consent before settling with the at-fault driver. If you settle without consent, you may forfeit your UIM rights.
Your UM/UIM limits are listed on your auto insurance declarations page (the summary page that shows all your coverages and limits). Look for:
- Uninsured Motorist Bodily Injury: Usually shown as two numbers (e.g., $50,000/$100,000) meaning $50k per person, $100k per accident.
- Underinsured Motorist Bodily Injury: Often the same limits as UM, but check—sometimes they are different.
- Uninsured Motorist Property Damage (UMPD): Not all states offer this; if you have it, it covers vehicle damage from an uninsured driver.
Some states allow “stacking” of UM/UIM coverage when you have multiple vehicles on the same policy. This can significantly increase your available coverage.
You can only recover up to the UM/UIM limits on the vehicle you were driving at the time of the crash.
Example: You have 3 cars on your policy, each with $50k UM coverage. You were injured while driving Car A. Your maximum UM recovery is $50k.
You can “stack” (add together) the UM/UIM limits from all vehicles on your policy, giving you much higher coverage.
Example: Same 3 cars, each with $50k UM. With stacking, your maximum UM recovery is $150k (3 × $50k).
Most UIM policies include a consent-to-settle clause, which requires you to get your insurer’s permission before settling with the at-fault driver. This protects your insurer from situations where you settle too cheaply and then try to recover the full amount from your UIM coverage.
Practical impact: Before you accept any settlement offer from the at-fault driver’s insurer, notify your own insurer and ask for consent. If you settle without consent, your insurer may deny your UIM claim entirely.
Your policy likely requires you to notify your insurer “promptly” or “as soon as practicable” after an accident involving an uninsured or underinsured driver. What counts as “prompt” varies, but:
- Notify your insurer within a few days of discovering the other driver is uninsured or underinsured.
- Open a UM/UIM claim in writing (email and certified mail).
- Do not wait months or years—delay can give your insurer grounds to deny coverage.
Making a UM/UIM claim is similar to a third-party liability claim, but with some key differences. You are dealing with your own insurer under a contract you paid for, but they will still investigate, evaluate, and often lowball you.
- Step 1: Confirm the other driver is uninsured or underinsured. Get a copy of the at-fault driver’s policy declarations page, a letter from their insurer stating their limits, or proof they have no insurance (DMV letter, insurer denial).
- Step 2: Notify your insurer in writing. Call and email your insurer’s claims department. State that you were injured by an uninsured/underinsured driver and want to open a UM/UIM claim. Reference your policy number, date of loss, and other driver’s information.
- Step 3: Provide documentation. Your insurer will assign an adjuster and request the same documents you would send in a third-party claim: police report, medical records, bills, wage loss, photos, etc.
- Step 4: Cooperate with investigation. Your policy requires you to cooperate. This may include giving a recorded statement, submitting to an independent medical examination (IME), and providing authorizations for records.
- Step 5: Send a formal demand letter. Once you finish treatment, send a demand letter to your own insurer, just as you would to a third-party insurer. Include all evidence and a specific settlement demand.
- Step 6: Negotiate or arbitrate. If your insurer makes a lowball offer or denies the claim, you can negotiate, demand arbitration (if your policy requires it), or file a lawsuit for breach of contract and bad faith.
- Delay the investigation to pressure you into accepting a low offer
- Order unnecessary IMEs with “hired-gun” doctors who minimize your injuries
- Argue that you were partially at fault to reduce the payout
- Claim your treatment was excessive or unrelated to the crash
- Refuse to pay without a credible reason and force you into arbitration
If you are making a UIM claim, you must first exhaust the at-fault driver’s liability limits before your UIM coverage kicks in. “Exhaust” means:
- The at-fault driver’s insurer has paid their full policy limits (e.g., $25,000 out of $25,000 available).
- You have a signed settlement agreement and release with the at-fault driver.
- You obtained your own insurer’s consent before settling (if required by your policy).
Once you have proof of exhaustion (settlement letter, release, check), you submit that to your own insurer and demand the remaining damages under your UIM coverage.
You may have other first-party coverages that can help immediately:
Pays your medical bills up to a set limit (often $5k–$10k) regardless of fault. You do not need to wait for liability determination or finish treatment. Med-pay is paid first; you still pursue UM/UIM for remaining damages.
Pays to repair or replace your vehicle regardless of fault (subject to deductible). You can file a collision claim immediately to get your car fixed, then pursue UM property damage or the at-fault driver for reimbursement later.
A UM/UIM demand letter follows the same structure as a third-party demand, but with a few key differences. You are writing to your own insurer under a contract, so the tone and framing are slightly different.
| Element | Third-Party Demand | UM/UIM Demand |
|---|---|---|
| Recipient | At-fault driver’s insurer | Your own insurer, UM/UIM claims department |
| Liability | Must prove the other driver was at fault | Same—must still prove other driver was at fault and you were not (or not mostly) |
| Proof of uninsured/underinsured status | Not needed | Must include proof: DMV letter, insurer denial, at-fault driver’s policy page, or proof of exhaustion of limits |
| Tone | Adversarial but professional | Contractual—”I paid for this coverage; the policy requires you to pay when these conditions are met” |
| Bad-faith exposure | Only if you are making a policy-limits demand | Higher—your own insurer owes you a duty of good faith and fair dealing under the contract |
- Opening: Reference your policy number, UM/UIM claim number (if assigned), date of loss, and purpose of the letter.
- Proof of uninsured/underinsured status: Attach proof that the at-fault driver was uninsured or that their limits have been exhausted.
- Liability narrative: Explain how the accident happened, cite police report and traffic violations, and show why the other driver was at fault.
- Injuries and treatment: Full medical narrative with records, bills, prognosis letters, and objective findings.
- Damages breakdown: Economic and non-economic damages, organized and itemized.
- Demand: Specific dollar amount, reference to your UM/UIM policy limits, and a deadline for response (typically 30 days).
- Arbitration notice: If your policy requires arbitration and you are prepared to demand it, mention that you will invoke arbitration if the insurer does not make a fair offer.
Re: Uninsured Motorist Claim — [Your Name]
Policy No.: [Your Policy Number]
Claim No.: [Claim Number]
Date of Loss: [Date]
Dear [Adjuster Name or Claims Department]:
I am writing to formally demand payment under my Uninsured Motorist coverage for injuries I sustained on [date] when I was struck by an uninsured driver, [other driver name]. Attached as Exhibit A is a letter from the [state] Department of Motor Vehicles confirming that [other driver] had no active auto insurance on the date of the collision. My damages far exceed my UM policy limits of [$X/$Y], and I am prepared to present a complete demand package for your review.
Unlike third-party demands, UM/UIM demands are subject to your policy’s contractual deadlines and arbitration/litigation timelines:
- Send your demand as soon as you finish treatment and have all documentation.
- Give your insurer a reasonable time to respond (30 days is standard).
- If they deny or lowball, you can demand arbitration (if required) or file suit for breach of contract and bad faith.
- Most UM/UIM policies require arbitration before you can sue, so review your policy’s dispute-resolution clause.
Many UM/UIM policies require binding arbitration if you and your insurer cannot agree on the amount owed. Arbitration is faster and cheaper than court litigation, but it has pros and cons.
- Demand arbitration in writing: If your insurer refuses to make a fair offer, you send a written demand for arbitration citing your policy’s arbitration clause.
- Select an arbitrator: You and your insurer each select an arbitrator, and those two arbitrators select a third (neutral) arbitrator. The three-arbitrator panel hears the case.
- Discovery and evidence: Limited discovery (less than full litigation). You exchange documents, witness lists, and expert reports.
- Arbitration hearing: You present your case (live testimony, medical records, expert witnesses). The insurer presents their defense (IME doctors, accident reconstructionists, comparative fault arguments).
- Award: The arbitrators issue a written award. In binding arbitration, this is final and enforceable like a court judgment (limited appeal rights).
Pros of arbitration:
- Faster than court (months vs years)
- Less formal, lower discovery costs
- Arbitrators often have expertise in insurance disputes
Cons of arbitration:
- No jury (arbitrators may be more conservative than juries in awarding pain-and-suffering)
- Limited appeal rights if you lose
- Arbitrator fees (you and the insurer split the cost)
In some situations, you may be able to sue your insurer in court instead of arbitrating:
- Bad-faith claim: If your insurer acted in bad faith (unreasonable delay, denial without investigation, refusal to pay a clearly valid claim), you may be able to file a lawsuit for breach of the duty of good faith and fair dealing. This is separate from the UM/UIM claim itself and is not always subject to arbitration.
- Policy does not require arbitration: Some older or non-standard policies do not have arbitration clauses. If yours does not, you can file a lawsuit for breach of contract.
- Arbitration waived by insurer: If your insurer acts inconsistently with arbitration (e.g., files a declaratory judgment action in court first), they may waive their right to arbitrate.
Your insurer owes you a duty of good faith and fair dealing under your UM/UIM policy. If they breach that duty, you may have a bad-faith claim that allows you to recover:
- Compensatory damages: The full amount they should have paid under the policy, plus interest.
- Consequential damages: Economic harm caused by the delay or denial (medical bills you could not pay, lost credit, emotional distress).
- Punitive damages: In some states, if the insurer’s conduct was especially egregious (fraud, intentional denial of a valid claim).
- Attorney’s fees: Some states allow fee-shifting in bad-faith insurance cases.
- Denies your claim without a reasonable investigation
- Refuses to pay when liability and damages are clear
- Delays unreasonably to pressure you into a low settlement
- Misrepresents policy terms or coverage limits
- Fails to communicate or respond to your demand for months
UM/UIM claims are more complex than standard third-party claims because you are dealing with your own insurer under a contract, consent-to-settle requirements, arbitration clauses, and bad-faith exposure. I help claimants:
- Understand their UM/UIM policy limits and exclusions
- Navigate consent-to-settle and exhaustion requirements
- Draft strong UM/UIM demand letters
- Negotiate with their own insurer
- Prepare for arbitration or coordinate with trial counsel for bad-faith litigation
Many people assume that making a claim against your own insurer will be easier or faster than dealing with a third-party insurer. That is not always true. Your insurer may:
- Argue that you were partially at fault to reduce the payout
- Send you to their own “independent” medical examiners who minimize your injuries
- Delay the investigation to pressure you into accepting less
- Claim your treatment was excessive or unrelated to the crash
- Refuse to pay and force you into arbitration
Having an attorney who understands UM/UIM contract language, arbitration procedures, and bad-faith law can make the difference between a fair settlement and a lowball offer.