Dingeman Dancer

What You Need to Know About UM/UIM Coverage

Author: Ashley Wahl

With the new Auto Law taking full affect next year, it is more important than ever to understand underinsured and uninsured motorist coverage. While many drivers have underinsured and uninsured motorist coverage, people are often unaware of what the coverage is for or how it works. Basically, if you are seriously injured in an auto accident as a result of another driver’s negligence you are entitled to this coverage if: (1) the at-fault driver’s policy limits are insufficient to compensate you for the pain and suffering you endured (underinsured); or (2) the at-fault driver was not insured or fled the accident scene (uninsured).

                        Currently, Michigan drivers are only required to carry a minimum of $20,000 per person/$40,000 per occurrence in bodily injury coverage.[1] These low-limit policies limit an injured individual’s potential non-economic (pain and suffering) recovery to $20,000 from an at-fault driver’s insurance, and multiple injured individuals to $40,000 from an at-fault driver’s insurance. Underinsured motorist coverage protects you from drivers with lousy coverage.

                        While underinsured motorist coverage is contractual, most insurance policies state that once an at-fault driver’s policy limits have been exhausted, a claim can be made for underinsured motorist coverage. For example:

  1. Driver A is only insured for $20,000 per person in bodily injury coverage;
  2. Driver B is insured for $100,000 in underinsured motorist coverage;
  3. Driver B is seriously injured in a collision caused by Driver A;
  4. Driver B makes a claim against Driver A for Driver A’s $20,000 policy limits;
  5. On behalf of Driver A, Driver A’s insurance agrees to tender the $20,000 policy limits;
  6. Driver B can now make a claim against his/her own insurance for underinsured motorist coverage of up to $80,000 in additional coverage ($100,000 - $20,000 (tendered by Driver A) = $80,000).[2]

                        While we like to assume that all drivers carry the requisite insurance coverage, it is estimated that 21% of Michigan drivers are not fully covered. Thus, uninsured motorist coverage protects you if you are seriously injured (1) by a driver with no insurance; or (2) in a hit-and-run collision. In either scenario, your insurance will defend your claim as though the driver who caused the collision was insured for your uninsured policy limits. 

                        Having sufficient underinsured and uninsured motorist coverage is now more important than ever. If you opt for lesser medical coverage in exchange for reduced premiums next year you might be forced to turn to your underinsured or uninsured motorist coverage if your medical bills exceed your No-Fault coverage and the at-fault driver’s bodily injury coverage.

If you were injured in a car accident and would like more information regarding your rights to recovery, please contact the experienced personal injury attorneys at Dingeman & Dancer, PLC, (231) 929-0500, 100 Park St., Traverse City, MI 49684.

[1] Notably, these limits increase to $50,000 per person/$100,000 per occurrence next year with the changes to Michigan’s Auto Law.

[2] Please note that there are usually several requirements that must be met prior to making a claim for uninsured motorist coverage. These requirements are contractual and are spelled out in your insurance policy.