Underinsured Motorist Coverage: Protection When Their Limits Fall Short

How UIM pays

Suppose another driver with 25/50 limits causes a crash and your injuries total $100,000. Their insurer pays $25,000. With reduced-by UIM of $100,000, your policy pays up to $75,000, the difference between your limit and theirs. With add-on UIM of $100,000, available in some states, your policy can pay up to $100,000 on top of their $25,000.

Reduced-by vs. add-on

Availability depends on state law.

The claims process

You typically must notify your insurer before settling with the at-fault driver's insurer and get its consent, so it can preserve its rights. Then your UIM claim proceeds with your own insurer. Keep medical records and bills organized.

State requirements

About half of states require some form of uninsured motorist coverage, and most others require insurers to offer it so you must reject it in writing. Examples from our state guides: West Virginia requires UM at 25/50/25, Virginia and North Carolina require UM/UIM at matching limits, Kansas requires UM/UIM at 25/50, while Arizona, Texas, Alabama, and Oklahoma require insurers to offer it.

Why minimum limits make UIM valuable

The Insurance Research Council has estimated that roughly one in seven U.S. drivers is uninsured, and many more carry only the state minimum. If one of them injures you seriously, their coverage may pay little or nothing. UM and UIM protect you and your passengers, and in many states they also apply when you are a pedestrian or cyclist.

Coverage terms to match on every quote

Limits shown are examples, not recommendations. State minimum requirements differ.

Three coverage levels compared

Examples only, not recommendations. Add UM/UIM at matching limits where possible.

Moving from the minimum to a middle level often costs less than people expect, because liability premiums do not rise in proportion to limits. Ask for both prices before deciding.

Ways to lower your premium

• Compare at least three quotes with identical coverage every year or two, and whenever your premium jumps at renewal.
• Raise collision and comprehensive deductibles to an amount you could pay tomorrow without strain.
• Drop collision and comprehensive on an older car only when the car's value is low enough that you could replace it yourself.
• Ask about every discount: multi-policy, multi-vehicle, good student, defensive driving, paperless, paid-in-full, and safety equipment.
• Try a driving-data program if you drive carefully and are comfortable sharing driving data. See usage-based insurance.
• Keep continuous coverage. Even a short lapse can raise future rates.
• Report accurate mileage. Lower annual mileage can mean a lower premium.
• Bundle auto with renters or homeowners insurance where the combined price is lower.

Discounts to ask about

Discount names, amounts, and availability vary by insurer and state.

Coverage you should think twice about cutting

Some coverage cuts save very little and expose you to large losses. Be cautious about:

• Buying only the state minimum liability. Minimum limits can be exhausted by a single serious injury, leaving you personally responsible for the rest.
• Rejecting uninsured motorist coverage. It protects you when the at-fault driver has no insurance or too little. See uninsured and underinsured motorist coverage.
• Dropping collision on a financed car. Lenders and lessors usually require it.
• Letting the policy lapse between vehicles or during a move.

How insurers set your price

Most insurers price a policy using your driving record, years licensed, age where allowed, the vehicle, where it is garaged, annual mileage, coverage limits, deductibles, prior insurance history, and, where state law permits, a credit-based insurance score. Each insurer weighs these factors differently, which is why quotes for the same driver can differ by hundreds of dollars. Improving the factors you control, especially your record and continuous coverage, pays off over several renewals.

Payment plans and fees

How you pay can change your total cost. Many insurers charge installment fees for monthly payments, and some offer discounts for paying the full term upfront, enrolling in automatic payments, or going paperless. If paying in full is not possible, ask which payment plan has the lowest fees. Missing a payment can cancel your policy and create a lapse, which raises future rates, so set up reminders or autopay.

If you are considered high risk

If several insurers decline you because of violations, accidents, a lapse, or a DUI, you still have options. Many insurers specialize in higher-risk drivers, and every state has a residual market plan for drivers who cannot find coverage in the voluntary market. Prices are higher, but keeping coverage continuous and your record clean will usually bring rates down over three to five years. If a court or the motor vehicle agency requires an SR-22 or similar filing, see our SR-22 insurance and high-risk auto insurance pages.

When an agent may help

Online tools work well for simple situations. A conversation with a licensed agent may be more useful when:

• You have a teen driver, several vehicles, or drivers with recent accidents or violations.
• You need an SR-22 or other state filing. See our SR-22 insurance page.
• You use a vehicle for rideshare, delivery, or other business purposes.
• You own a home, rental property, or significant savings and want liability limits that work with an umbrella policy.
• You have had a claim denied or a policy nonrenewed and need help understanding your options.

An agent can also explain differences in policy wording that are hard to see on a results page.

Switching insurers without a gap

If a new quote is lower, switch carefully so you are never uninsured:

1. Confirm the final price after the insurer verifies your information.
2. Set the new policy to start on or before the date the old one ends.
3. Give the new insurer your lender or lessor information if the vehicle is financed.
4. Save your new ID cards and declarations page.
5. Cancel the old policy effective the same day, and ask about any refund of unused premium.
6. If you have an SR-22, confirm the new insurer files it before the old filing ends.

State rules that affect every policy

Car insurance is regulated state by state, which affects any company comparison:

• Minimum liability limits differ widely. State minimums are often far below what a serious accident costs, so many drivers choose higher limits.
• No-fault states require personal injury protection, which changes how injury claims are paid.
• Rating factors differ. Some states limit or ban the use of credit-based insurance scores, gender, or occupation in pricing.
• Uninsured motorist rules differ. Some states require it; others require insurers to offer it and let you reject it in writing.
• Company availability differs. A company's programs, discounts, and appetite in one state may not match another.

A comparison that is accurate in one state can be wrong in the next, which is another reason to compare actual quotes for your address rather than national averages.

Adding a teen driver

Adding a newly licensed teen is one of the biggest premium increases most American households face. Ask about good student and driver-training discounts, assign the teen to the least expensive car where allowed, consider telematics, and keep higher liability limits. Compare quotes when the teen is added.

What to have ready for a quote

These details help produce accurate quotes.

1. Driver details. License numbers and dates of birth for every household driver.
2. Vehicle VINs. And annual mileage for each vehicle.
3. Driving history. Accidents and violations in the past three to five years.
4. Current declarations page. To match limits and deductibles.
5. Garaging address. Where each vehicle is kept.

Underinsured motorist coverage FAQs

Related guides

• UM and UIM coverage
• Uninsured motorist coverage
• Car insurance

Your next step

Request a quote, and a licensed agent will compare options available to us using the coverage you choose.