What is underinsured motorist (UIM) coverage?
UIM coverage is part of your own auto policy that pays when you are injured by an at-fault driver whose liability limits are too low to cover your damages. It bridges the gap between the at-fault driver's insurance and your actual losses, up to your UIM limit.
How does UIM coverage work in offset versus add-on states?
In offset (reduced-by) states, your UIM limit is reduced by the amount the at-fault driver's insurer pays — so a $250,000 UIM limit minus a $50,000 liability payment leaves $200,000 of UIM available. In add-on (stacking) states, the UIM limit applies on top of the liability payment, giving you more total coverage.
When can I make an underinsured motorist claim?
You can make a UIM claim when your damages exceed the at-fault driver's available liability limits and your UIM limit is higher than those limits. Most policies require you to exhaust the at-fault driver's coverage first and to notify your own insurer before settling with the at-fault party.
What is the minimum auto liability limit in the US?
State minimums are low — often $25,000 to $50,000 per person for bodily injury. Because many drivers carry only the minimum, a serious injury can easily exceed their limits, which is why carrying substantial UIM coverage on your own policy is strongly recommended.