By Robert Foss
Note: This blog post is intended to offer a high-level view of Uninsured and Underinsured Motorist insurance, and how it might affect individuals injured by a negligent driver. The details are often technical and very situation-specific. If you have been injured in a motor vehicle collision and have any reason to believe that the at-fault party may not have insurance or has insufficient insurance, you should immediately contact a lawyer and your insurance provider.
California Law requires that drivers maintain at least minimum levels of coverage for their automobiles, yet more than 16% of drivers on the road have no insurance at all.[1] Even if they do have insurance, they may only be carrying “Basic Coverage” insurance, but even that amount could be insufficient to cover your losses if you are injured by another driver in an automobile collision. So, what can potentially protect you if you are injured by a driver with too little insurance or no insurance at all? There may be an Uninsured Motorist or Underinsured Motorist policy that covers the incident. These policies are designed to help in the situation where the at fault-driver does not have enough insurance to compensate those injured.
Understanding Insurance Rules of the Road: Minimum Policy Limits
California minimum automobile liability coverage follows the “15–30–5 Rule,” which refers to the minimum “Basic Coverage” policy limits for all automobile liability insurance policies in California:
- $15,000 for the bodily injury or death of one person
- $30,000 for bodily injury or death of two or more people
- $5,000 for property damage (such as objects, vehicles, buildings, or your vehicle) which are damaged or destroyed by the insured vehicle.
These policy limits are typically ‘per incident’ limits, which means that if multiple people are injured by the at-fault driver, you will likely have to split these relatively small amounts among several parties.
You may have noticed that these limits seem low when you consider the cost of medical care, and that most cars on the road are worth far more than $5,000. The minimums seem low because they are: these dollar amounts were set more than 50 years ago, in 1967. These Basic Coverage limits are finally set to increase on January 1, 2025, when the minimums for bodily injury or death will double to $30,000 for one person ($60,000 for two or more people) and property damage minimums will increase to $15,000.[2]
Uninsured and Underinsured Motorist Coverage: Financial Recovery Beyond the Policy Limits of the At-Fault Driver
Uninsured Motorist (“UM”) and Underinsured Motorist (“UIM”) policies offer additional insurance for situations where there isn’t enough money to compensate the injured parties for their damages. This typically occurs because the at-fault driver either lacks sufficient insurance or has no insurance at all. The UM/UIM policy is usually purchased by the owner of the vehicle in addition to their required liability car insurance, and often has different policy limits than the liability coverage. There are two hallmarks of almost every UM/UIM policy: (1) the injured party must exhaust their remedies against the insured / at-fault driver’s insurance policy, and (2) the UM/UIM policy limit is offset (reduced) by amounts of recovered from other sources.
- The Exhaustion Requirement
Normally, UM/UIM policies require exhaustion of other sources of insurance money before the UM/UIM policy will pay anything. In effect, this means that you cannot proceed against the UM/UIM policy limits until you have gotten all of the other insurance available. For example, if the at-fault driver has a $50,000 bodily injury policy limit, their insurance needs to pay out the entirety of that amount before your UM/UIM policy will pay anything at all. (If you are injured while working, you will need to exhaust your benefits through your employers Workers’ Compensation insurance before the UM/UIM policy will pay anything.) The exhaustion requirement also means that if you settle with the at-fault driver’s insurance for less than their policy limit, your UM/UIM policy will not pay anything at all.
- The UM/UIM Policy Limit Amount is “Offset” by Amounts Recovered from Other Sources
Although the UM/UIM policy will have a separate policy limit listed, the amount the UM/UIM insurer may pay will be reduced by any amount recovered from the at-fault driver. To illustrate how this works, assume you have physical injuries worth $200,000, and a UM/UIM policy with a $100,000 policy limit. The chart below shows what the maximum amount the UM/UIM would pay, and total amount recoverable from both the liability and UM/UIM policies:
| When the At-Fault Driver’s Policy Limit Is: | UM/UIM May Pay Up To: | Total Amount Recoverable from Both Policies: |
| $0 | $100,000 | $100,000 |
| $15,000 | $85,000 | $100,000 |
| $75,000 | $25,000 | $100,000 |
| $100,000 | $0 | $100,000 |
| $125,000 | $0 | $125,000 |
Keep this “offset” concept in mind when investigating whether there may be applicable UM/UIM coverage for your incident.
How Do I Know If I Have UM/UIM Insurance Coverage?
It depends. UM/UIM coverage is typically included as part of your automobile liability policy, and although you can choose to waive it, the Insurance Code mandates that your insurance provider must obtain a written waiver. Contact your automobile insurance provider and inquire about your policy, whether you have UM/UIM and the limits of any coverage.
If you are injured in a motor vehicle collision while driving your employer’s vehicle, they may also have a UM/UIM policy that covers you as the driver of their vehicle. Although your injuries may be covered (in part) by your employer’s Workers Compensation insurance, you should ask your employer as soon as possible where there is an additional UM/UIM policy.
When Do I Need to File a UM/UIM Claim?
The timing of when you need to file a claim for UM/UIM coverage varies significantly depending on a number of factors, so it is important to move quickly. Because UM/UIM policies generally require that all other sources of payment be exhausted first, you may have quite a lot of time after the accident that you need to make a claim. (For example: if you are injured in a collision while working and are receiving Workers Compensation benefits, the deadline for filing a claim with the UM/UIM insurance carrier may be months or even years after the collision.[3]) On the other hand, if the injury is the result of a “hit-and-run” collision, additional requirements can apply, including filing a report with local law enforcement within 24 hours of the incident, followed by a UM claim with the insurer within 30 days of the incident.[4]
Conclusion
When injured by another driver with insufficient insurance coverage, a UM/UIM policy may provide an additional source of recovery of funds. However, because many factors may affect whether the UM/UIM policy applies, and how much money is available, you should consider contacting a lawyer as soon as possible to ensure your rights are protected.
[1] https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists
[2] California Vehicle Code § 16056
[3] California Insurance Code § 11580.2(p)(3)
[4] California Insurance Code § 11580.2(b)
