Doug Mudford
Q&A Expert
Attorney
UIM … what?

Q: I’ve purchased $100,000 worth of Uninsured Motorist coverage (UIM) to
protect me against an uninsured driver. If there’s an accident, which is not my fault, do I collect the full amount?

Answer: UIM coverage is not like a life insurance policy where death triggers the payment of a set amount. UIM protects you if the other diver 1) doesn’t have any insurance or 2) doesn’t have enough insurance to cover your injury.

The amount of your UIM policy must be higher than the other driver’s limits. If, for example, you both have $100,000 limits, your UIM policy does not apply. It isn’t an automatic payment of the full amount of coverage. You must come to an agreement with the insurance company as to the amount paid. Oftentimes, this process becomes contentious and both sides hire attorneys.

Clients are almost always surprised and irritated when they pay for insurance they expect to pay off automatically. From the insurance company’s perspective, it never agreed to automatically pay. Determining how much of the coverage you get can be difficult. Let’s take an example:

A single working mother purchases $100,000 of UIM coverage and is rear-ended on the way to pick up her children at daycare. She sustains a fractured leg (cast) and neck injuries requiring physical therapy and chiropractic treatment. She’s had no previous neck problems nor seen a chiropractor. She misses 30 days work ($2,000 wage loss), her neck still hurts and her leg has healed although it still aches when cold. She has difficulty playing with her young children. Her soft tissue neck injury will hurt for months, maybe years. Her medical bills are about $7,000 and she will require more treatment.

The other driver had the minimum required $15,000 insurance.

Before she can negotiate with her insurance company about the UIM coverage she purchased, she must first get the full policy limits from the other driver. Because of the releases, dismissal and negotiations involved, she generally will have to retain a lawyer to complete this step. Here she gets the other driver’s policy limits.

She does not consider $15,000 adequate compensation so she can now try to collect additional money from her UIM policy. A common misunderstanding is that $100,000 is available. If the other party had no insurance, the full amount is in play. In our example, the other driver had and paid $15,000. That amount is deducted from the UIM policy, leaving $85,000.

Your insurance company will usually take your deposition, order your medical records, check for pre-existing injuries, get employment records and possibly ask for a medical examination by its own doctor. After collecting this data, the case is evaluated and an offer to settle is made. In our example, let’s say an additional $5,000 out of the $85,000 is offered. Evaluating cases is an art not a science and is the topic for another day. In the vast majority of cases, you and the insurance company will initially disagree over a reasonable settlement amount. If both sides agree to disagree, the case is set for binding arbitration where a third party listens to both sides and makes a final decision as to the settlement amount. By now the insurance company has generally hired a lawyer to represent its interests.

Although UIM arbitrations were supposed to speed litigation, the time for resolution is not much different than a typical civil case; a year or more.

In this age, UIM coverage is important to have. Just understand the instruction manual for using it may be a little frustrating. Clients almost always express disappointment their “own” insurance company is against them. It may help to think in terms of paying your insurance company to step into the shoes of the UIM.

The above example is a very, very typical case.