Key Takeaways
- Uninsured Motorist (UM) coverage pays when you're injured by a driver who has NO insurance or by a hit-and-run driver
- Underinsured Motorist (UIM) coverage pays when the at-fault driver's limits are LESS than your damages
- UM/UIM coverage typically mirrors your liability limits — if you have 100/300, your UM/UIM is often 100/300
- Hit-and-run accidents ARE covered under UM if there's physical contact with the fleeing vehicle (varies by state)
- UM/UIM coverage is MANDATORY in about 20 states, and highly recommended in all states
Part C: Uninsured/Underinsured Motorists
Part C protects you when the other driver is at fault but has no insurance (or not enough insurance) to pay for your injuries.
The Problem Part C Solves
Despite mandatory insurance laws, many drivers are uninsured or underinsured:
- Approximately 13% of drivers are uninsured nationally
- Some states have rates over 20%
- Many drivers carry only state minimum limits
- State minimums are often inadequate for serious injuries
Uninsured Motorist (UM) Coverage
What It Covers
Pays for bodily injury caused by:
- A driver with NO liability insurance
- A hit-and-run driver
- A driver whose insurer is insolvent
How UM Works
Scenario: You're injured by an uninsured driver. You have $100,000 UM coverage.
| Your Damages | At-Fault Driver's Insurance | UM Pays |
|---|---|---|
| $75,000 | $0 (uninsured) | $75,000 |
| $150,000 | $0 (uninsured) | $100,000 (limit) |
Hit-and-Run Coverage
Requirements vary by state:
| State Approach | Requirement |
|---|---|
| Physical contact required | Must be contact between vehicles |
| No contact required | Witness corroboration may be needed |
| Time to report | Usually 24 hours to police |
Underinsured Motorist (UIM) Coverage
What It Covers
Pays the difference when the at-fault driver's coverage is less than your damages.
How UIM Works
Scenario: You have $100,000 UIM. At-fault driver has $25,000 liability.
| Your Damages | At-Fault Insurance Pays | UIM Pays | Total Recovery |
|---|---|---|---|
| $80,000 | $25,000 | $55,000 | $80,000 |
| $150,000 | $25,000 | $75,000* | $100,000 |
*Limited to your UIM coverage minus what at-fault driver paid, or up to your UIM limit.
UIM Calculation Methods (Varies by State)
| Method | Calculation | Example |
|---|---|---|
| Difference Method | UIM limit - At-fault limit | $100K UIM - $25K = $75K max |
| Add-On Method | Full UIM limit applies | $100K UIM available regardless |
UM vs. UIM Comparison
| Feature | UM | UIM |
|---|---|---|
| Trigger | No insurance | Insufficient insurance |
| Hit-and-run | YES | Usually NO |
| Insurer insolvent | YES | NO |
| Coverage for | BI (usually) | BI (usually) |
Who Is Covered Under Part C
| Person | Covered? |
|---|---|
| Named insured | YES |
| Family members (resident) | YES |
| Occupants of covered auto | YES |
| Occupants of non-owned auto (if using with permission) | YES (named insured & family) |
Part C Limits
Typical Limits
UM/UIM limits often match your liability limits:
| Liability | Typical UM/UIM |
|---|---|
| 50/100 | 50/100 |
| 100/300 | 100/300 |
| 250/500 | 250/500 |
State Requirements
| Requirement Level | States |
|---|---|
| Mandatory UM | About 20 states |
| Optional but offered | Most states |
| UIM required | Fewer states than UM |
Part C Exclusions
| Exclusion | Reason |
|---|---|
| Using vehicle without permission | Not authorized use |
| Public/government-owned vehicles | Sovereign immunity issues |
| Workers' compensation situations | Covered by WC |
| Settling without insurer consent | Waives subrogation rights |
Practical Applications
Stacking UM/UIM Coverage
Some states allow "stacking" — combining UM/UIM limits from multiple vehicles:
Example (Stacking Allowed):
- You have 2 vehicles, each with $100,000 UM
- Stacked limit: $200,000 UM available
Example (No Stacking):
- Limit per accident: $100,000 regardless of vehicles
Arbitration Clause
Many UM/UIM claims are resolved through arbitration:
- Faster than litigation
- Both parties select arbitrators
- Binding decision
Exam Tip: UM covers hit-and-run accidents. UIM covers accidents with drivers who have SOME insurance, but not enough.
A hit-and-run driver injures you and flees the scene. Which coverage would pay for your injuries?
An at-fault driver has $25,000 liability limits, but your injuries total $100,000. You have $100,000 UIM coverage. Using the "difference" method, how much will UIM pay?
Approximately what percentage of drivers in the U.S. are uninsured?
5.5 Part D: Physical Damage Coverage
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