We get this question frequently, and rightly so, as it is usually the most expensive coverage on your policy.
We will start by breaking down the acronyms for each coverage part:
- UIM coverage stands for underinsured motorist coverage.
- UM coverage stands for uninsured motorist coverage.
Both UIM and UM coverage provide the same coverage, however, they provide the coverage in different circumstances.
UIM, underinsured motorist, coverage will pay for injuries caused to you that resulted from an accident that was another driver's fault, but that driver doesn't have enough insurance to cover the expenses related to your injuries. After you receive the settlement from the other driver's insurance company, you are then allowed to file on your own policy under the UIM coverage to receive additional funds to cover the remaining expenses and bodily injury damage related to the accident.
Let's go through an example. Say you were in a car accident with another driver. The other driver is at fault. You received serious injuries and had to go to the hospital and had multiple surgeries and therapy resulting from the accident. When you file the claim on the other driver's policy you find that the other driver only has limits of $25,000 per person, however, your medical bills have totaled $85,000. You receive $25,000 from the other driver's insurance company, which leaves you with a bill of $60,000. On your own policy you have UIM limits of $250,000 per person. You can then file on your own insurance and potentially receive $60,000 of the $250,000 available for this accident.
UM, uninsured motorist, coverage will pay for your injuries caused to you that resulted from an accident that was another driver's fault, but that driver doesn't have any insurance at all. Your UM coverage will provide funds to cover medical expenses related to your injuries caused by the other driver.
Both UIM and UM coverage are EXTREMELY important. There are a significant number of uninsured and underinsured drivers in every state. This coverage is the only coverage on your auto policy that protects you financially from these other drivers. Your bodily injury liability coverage doesn't provide coverage if the other driver is at fault. Many people would like to reject UIM/UM coverage to save money, however, I can say with 100% certainty it is not worth the savings. As we have said in all of our other posts, insurance is meant to protect us! Don't take away that protection to save a few hundred dollars when an uncovered claim could cost you tens of thousands of dollars. Play it safe and always keep the coverage!