In California, the minimum insurance coverage that most drivers can carry to drive is
$15,000.00 per person/$30,000.00 per accident for bodily injuries. In some cases, an insurance
policy does not even apply; for example, hit-and-run accidents, or even accidents where the at-
fault driver’s insurance policy had lapsed. These low limits are extremely problematic because
even low-speed, low-impact accidents can result in medical bills that far exceed these minimum
limits.
This is why drivers are highly advised to purchase Underinsured Motorist Coverage (UIM) and
Uninsured Motorist Coverage (UM). Underinsured Motorist Coverage (UIM) applies when
another driver does not have enough insurance coverage to cover your medical bills and/or
property damage. On the other hand, Uninsured Motorist Coverage (UM) applies when the
other person does not have any coverage to cover your medical bills and/or property damage.
How UIM & UM Claims Operate
For Underinsured Motorist Coverage (UIM) claims, you must first maximize the at-fault driver’s
policy limits, meaning you received the maximum bodily injury coverage that was available
from the at-fault driver’s insurance coverage. Then, you will file a claim with your own
insurance company to pursue a Underinsured Motorist Coverage (UIM) claim, which is
calculated as the difference between your coverage and the other driver’s coverage. Here’s an
example:
• Alan rear-ends Bob and Bob suffers bodily injuries. Alan carries a state-minimum policy
of $15,000.00/person, and Bob has a $30,000.00/person UIM coverage. After receiving
medical treatment, Bob is able to settle his claim against Alan’s insurance company for
the maximum coverage of $15,000.00. The problem is, Bob’s medical bills exceed Alan’s
coverage, so Bob files a UIM claim with his own insurance company. Bob’s insurance
company will pay Bob the remainder of his own UIM policy, after reducing the amount
that Bob received from Alan’s insurance company; here, Bob’s $30,000.00 UIM policy
would be reduced by $15,000.00, and Bob would receive $15,000.00 from his own UIM
policy. All in, Bob received $30,000.00 to compensate him for the injuries he sustained
from being rear-ended.
Uninsured Motorist (UM) claims on the other hand will only apply if the other driver does not
have any insurance coverage. Going with the above example, if Alan fled the scene or did not
have any valid coverage, Bob would pursue an uninsured motorist (UM) claim through his own
insurance policy from the beginning and would receive his total compensation from his own
insurance company.
Additionally, in California, your insurance rates will not increase as a result of filing
Underinsured Motorist Coverage (UIM) and Uninsured Motorist Coverage (UM) claims. These
are additional coverages that you opt-in for, and will not be penalized for using.
