When the Other Driver is Uninsured or Underinsured
How to recover compensation from your own insurance when the at-fault driver has no coverage or not enough to cover your damages
13%
of U.S. drivers have no auto insurance
30%+
of liability policies are state minimums (often inadequate)
UM/UIM
First-party claim against your own insurer
What is UM/UIM coverage and when does it apply?
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.
UM vs UIM: what's the difference?
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.
Example: You are seriously injured in a crash. Your damages are $150,000. The at-fault driver has only $25,000 in liability coverage. You have $100,000 in UIM coverage. You can recover:
$25,000 from the at-fault driver's insurer
Up to $75,000 from your own UIM coverage (to reach your $100k limit)
Without UIM, you would be stuck with only $25,000 plus any personal assets the at-fault driver has (usually none).
When you cannot use UM/UIM (common exclusions)
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.
California-specific guidance: If your crash happened in California, see the California car accident demand letters guide for California-specific UM/UIM rules, including how Prop 213 (no pain-and-suffering if you were uninsured) affects UM claims and how California handles UM arbitration.
Not sure if you have UM/UIM coverage?
I review auto policies and help claimants understand their UM/UIM rights and limitations before making a claim.
How to find out if you have UM/UIM coverage and how much
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.
Common mistake: Many people assume their UM/UIM limits are the same as their liability limits. That is not always true. You may have $100k/$300k liability coverage but only $25k/$50k UM/UIM if you did not increase it when you bought the policy. Check your declarations page.
Stacked vs non-stacked UM/UIM
Some states allow "stacking" of UM/UIM coverage when you have multiple vehicles on the same policy. This can significantly increase your available coverage.
Non-stacked UM/UIM
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.
Stacked UM/UIM
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).
Check your policy: If your state allows stacking and you have multiple vehicles, stacked coverage may already be included (it usually costs a bit more). If you do not have it, consider adding it when you renew—it can be the difference between recovering $50k and $150k+ after a serious crash.
Consent-to-settle clauses
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.
Notice and timing requirements
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.
Confused about your UM/UIM coverage?
I review auto policies, explain coverage limits and exclusions, and help you navigate consent-to-settle and notice requirements.
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-by-step: opening a UM/UIM claim
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.
Watch out for bad-faith tactics. Even though this is your own insurer, they may:
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
Document everything and consider hiring an attorney if your insurer is stonewalling.
Handling exhaustion of at-fault driver's limits (UIM claims)
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.
UM/UIM vs med-pay and collision coverage
You may have other first-party coverages that can help immediately:
Med-pay (medical payments)
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.
Collision coverage
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.
Ready to open a UM/UIM claim?
I guide claimants through the UM/UIM claims process, including notice, exhaustion of third-party limits, and demand letter preparation.
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.
Key differences from third-party demands
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
Structure of a UM/UIM demand letter
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.
Sample language (opening):
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.
Timing and deadlines
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.
Need help drafting a UM/UIM demand letter?
I draft UM/UIM demand letters for injury victims, with a focus on maximizing recovery and positioning for arbitration if necessary.
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.
How UM/UIM arbitration works
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).
Arbitration vs litigation:
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)
When you can skip arbitration and go straight to court
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.
Bad-faith claims against your own insurer
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.
When to pursue bad faith: If your insurer:
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
Consult an attorney experienced in insurance bad-faith litigation.
Facing UM/UIM arbitration or bad-faith issues?
I advise claimants on UM/UIM arbitration strategy and coordinate with trial counsel when bad-faith litigation is necessary.
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
Why UM/UIM claims are different
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.
California focus: Most of my UM/UIM work is California-based. California has specific rules on UM/UIM arbitration, bad-faith insurance practices, and how Prop 213 affects UM claims when the claimant was uninsured. If your case is outside California, I can provide strategic guidance but will coordinate with local counsel where necessary.
Frequently asked questions
Yes, in most states. UM/UIM coverage applies as long as the other driver was also at fault. However, your recovery will be reduced by your percentage of fault (comparative negligence). For example, if your damages are $100k and you were 20% at fault, you can recover up to $80k under your UM/UIM coverage (subject to policy limits).
If your policy has a consent-to-settle clause and you settled without consent, your insurer may deny your UIM claim. Some policies allow you to settle without consent if you can prove the settlement was reasonable and you acted in good faith, but that is an uphill battle. Always get written consent before settling if you plan to pursue UIM.
Typically 6–18 months from demand for arbitration to final award. It is faster than court litigation (which can take 2–3+ years), but it is not instant. The timeline depends on how quickly arbitrators are selected, how complex the case is, and whether there are delays in discovery or scheduling.
Maybe. Arbitration clauses usually apply to disputes over the amount owed under the policy, not to separate tort claims for bad faith. In many states, you can file a bad-faith lawsuit in court even if your UM/UIM coverage dispute is in arbitration. This is a complex area of law and varies by state—consult an attorney.
Not legally required, but highly recommended for anything beyond minor injuries. UM/UIM claims involve complex contract interpretation, arbitration clauses, and bad-faith risk. Studies show that claimants with attorneys recover significantly more than those without, even after attorney fees. If your damages exceed $20,000–$30,000, or if your insurer is stonewalling you, consult an attorney.
Ready to discuss your UM/UIM claim?
Contact me to review your policy, evaluate your claim, and discuss demand letter or arbitration strategy. California focus.