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Underinsured Motorist Coverage: When Auto Liability Coverage is Not Enough

Q:   What are underinsured motorists and how are they different from uninsured motorists?
A
:   Ohio law requires all drivers to have proof of financial responsibility, proving that they can pay for injuries or damages to others if they cause a car accident. The minimum amount required is $25,000 per person and $50,000 per accident, and most drivers meet this requirement by buying car insurance that includes liability insurance. Drivers who do not meet this requirement are “uninsured.” In some cases, a driver may have the required amount of financial responsibility or liability coverage, but not enough to pay for the injuries they cause. In these situations, the driver is “underinsured.”      

Q:   What is underinsured motorists’ (UIM) coverage and how does it work?
A:
   If you are injured by an at-fault underinsured driver, UIM coverage may pay the costs of accident-related medical expenses, wage loss, and pain and suffering that exceed the underinsured driver’s limits. In Ohio, UIM coverage applies if your UIM limits are greater than the liability limits of the underinsured driver. This point at which UIM coverage kicks in is called a “limits trigger.” Your available UIM coverage is based on the difference your UIM limits and the underinsured driver’s liability limits. For example, if the underinsured driver has $25,000 in liability limits, and you have $50,000 in UIM limits, you would be able to collect up to $25,000 ($50,000 - $25,000) from your UIM coverage. 

Q:  If the underinsured driver’s liability limits are the same as my UIM limits, can I make a claim for UIM coverage?
A:
  Generally, no. If the underinsured driver has $25,000 in liability limits and you have $25,000 in UIM limits ($25,000 - $25,000 = $0), no UIM coverage would be available. But, if the underinsured driver’s liability limits are reduced because of payments to others injured in the accident, you may be able to make a claim. For example, if two other people were injured in the same accident, and each received $5,000, the amount of liability limits available for you is only $15,000. Using the limits trigger formula, $25,000 - $15,000 would give you up to $10,000 in UIM coverage.
 
Q:  Am I required to buy UIM coverage?
A:
 No. UIM coverage is optional. 

Q:   If I don’t choose to buy UIM coverage, do I have any recourse against the at-fault driver? 
A:
   You can attempt to collect your additional accident related costs directly from the at-fault driver. Unfortunately, many underinsured drivers do not have the financial ability to pay your claims. 

Q:  Who would be covered by my UIM insurance?
A: 
 UIM covers you, and in many cases, your family members injured by an uninsured vehicle, even if they are not in your vehicle when the injury occurs (if, for example, you or a family member is injured by an underinsured driver while crossing the street on foot). “Family member” means anyone related to you who lives in your home, including those related by marriage and adopted children. Family members who own and insure their own cars generally are not covered under your UIM policy. Similarly, your passengers may be covered while riding in your vehicle, or they may have UIM coverage with their own insurance companies. UIM coverage forms can have different descriptions of who is insured and what policy provides primary coverage. Be sure to review the specific language of your own UIM policy.

Q:   How much UIM coverage do I need?
A:
   If you choose to buy UIM coverage, you generally would buy coverage for the same amount as your liability coverage. You cannot buy a higher limit of UIM coverage to protect yourself than you buy in liability coverage to protect others. Each person’s insurance situation is different. You should evaluate your own risk and financial situation and buy the amount of coverage best meets your needs.

Q:   If I am in an accident with an underinsured driver, can I negotiate directly with that driver’s insurance company?
A: 
 You can negotiate directly with the driver’s insurance company; however, most UIM policies require you to get permission from your UIM insurance carrier BEFORE you settle your claim. Your insurance company may have a right to collect their UIM payments directly from the underinsured driver.  If you settle your claim, you jeopardize your company’s right to recover, and your company may deny your UIM claim. Notify your insurance company if you think that the at-fault driver may be underinsured.  

Q:   Will making a claim for UIM coverage make my insurance premiums go up?
A:
   Probably not. Ohio law prohibits insurance companies from increasing the cost of auto insurance policies solely because an insured makes an uninsured or underinsured claim. However, this may not apply if you contributed to causing the accident or if you violated a motor vehicle law.

4/11/2013

This “Law You Can Use” column was provided by the Ohio State Bar Association. It was prepared by attorney Deborah Kenney of The Motorists Group in Columbus.​​

Articles appearing in this column are intended to provide broad, general information about the law. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.

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