In California, Uninsured Motorist (UM) and Underinsured Motorist (UIM) coverage are automatically included in your auto insurance policy unless you specifically decline them in writing. With nearly 1 in 6 California drivers operating without insurance, this coverage serves as a vital safety net.
What Does UM/UIM Cover?
This insurance pays for your losses when the person at fault for an accident:
- Has no insurance at all.
- Has insurance limits that are too low to cover your total expenses.
- Commits a hit-and-run and cannot be identified (provided there was physical contact with your vehicle).
1. Uninsured vs. Underinsured: The Difference
Uninsured Motorist (UM)
Covers your costs if the at-fault driver has zero insurance or flees the scene. It is divided into two parts:
- UMBI (Bodily Injury): Covers medical bills, lost wages, and pain and suffering.
- UMPD (Property Damage): Covers repairs to your vehicle.
Underinsured Motorist (UIM)
This applies when the at-fault driver has insurance, but their policy limits are lower than your damages. UIM pays the difference between the other driver’s limits and your own policy limits.
Note: Your UIM payout may be reduced if you receive compensation from other sources, such as Workers’ Comp, Med-Pay, or a manufacturer’s liability claim.
2. Why UM/UIM is Better Than Health Insurance Alone
Even if you have excellent health insurance, UM/UIM is highly recommended because it covers costs that health insurance won’t, including:
- Lost Wages: Compensation for time missed at work.
- Pain and Suffering: Non-economic damages for your trauma.
- Specialty Care: Coverage for services like chiropractic care or acupuncture.
- No Deductibles: Unlike most health plans, you won’t face high co-pays or deductibles for these claims.
Broad Protection: This coverage follows you and your household family members whether you are driving, walking, cycling, or even riding a horse!
3. Policy Limits: How Much Do You Need?
The legal minimum coverage in California is often insufficient for serious accidents. Standard minimums are:
- $30,000 per person (Bodily Injury)
- $60,000 per accident (Total Bodily Injury)
- $15,000 for property damage
Important Rule: In California, you can only use UIM if your limits are higher than the at-fault driver’s. For example, if you both have $30,000 limits, you cannot claim UIM. Experts generally recommend carrying $300,000 to $500,000 in coverage to ensure full protection.
4. The Claims Process
Most UM/UIM claims are settled directly with your own insurance company. Under California law, your insurer must:
- Investigate the claim promptly.
- Act in “good faith” to reach a fair settlement.
If there is a dispute over the value of your claim, the case may go to binding arbitration, where a neutral third party (like a retired judge) makes a final decision. If an insurer unfairly delays or denies your claim, you may have grounds for a “bad faith” lawsuit.
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