Uninsured and Underinsured Motorist Claims, Explained

Uninsured motorist (UM) coverage pays you when the at-fault driver has no insurance. Underinsured motorist (UIM) coverage pays when their insurance is too small to cover your losses. Both claims are made against your own policy, which means your own insurer becomes the party you negotiate against.

How common are uninsured drivers?

About 1 in 7 drivers had no insurance in 2023. The Insurance Research Council's study Uninsured and Underinsured Motorists: 2017 to 2023, released February 17, 2025, put the national uninsured rate at 15.4%.

Counting drivers with too little coverage, the combined uninsured and underinsured rate was 33.4%. Rates ranged from 28.2% uninsured in Mississippi to 5.7% in Maine, according to the Insurance Information Institute.

How does a UM or UIM claim work?

You file with your own insurer and prove 2 things: the other driver was at fault, and your damages. The insurer then pays what the at-fault driver would have owed, up to your UM or UIM limit.

A UM claim covers a driver with no policy at all. In many states it also covers a hit-and-run driver who can't be found. A UIM claim starts only after the at-fault driver's liability insurer pays its limit.

California spells out that order. Under Insurance Code §11580.2(p), UIM applies only after the at-fault driver's liability limits "have been exhausted by payment of judgments or settlements."

In California, a vehicle only counts as "underinsured" if its liability limit is lower than your own UM limit. If you carry $30,000 in UM and the other driver carries $30,000 in liability, there is no UIM claim at all.

Which states require UM coverage?

About 20 jurisdictions make UM coverage mandatory, according to the Insurance Information Institute. Its state table lists UM as required in these places, among others:

• Connecticut, Illinois, Maine, Maryland, Minnesota, Nebraska, New Jersey, New York, North Carolina, North Dakota, Oregon, South Dakota, Vermont and Virginia, which the table lists as requiring both UM and UIM.
• The District of Columbia, Missouri, South Carolina, West Virginia and Wisconsin, which the table lists as requiring UM.

The III notes that state rules differ and says to confirm with your state insurance department. Many other states require insurers to include the coverage unless you reject it in writing.

California lets you delete UM coverage only "by agreement in writing" under §11580.2(a)(1). Texas bars insurers from issuing a policy without UM/UIM unless the named insured rejects it in writing, under Insurance Code §1952.101. See our California and Texas pages.

If you never signed a rejection, you may have UM coverage even if you don't remember buying it. Ask your insurer for a copy of any signed rejection form.

Why does UIM matter if the other driver is insured?

State minimum limits are low compared with the cost of a serious injury. California's minimum is $30,000 for one person's injury and $60,000 per accident, according to the California Driver Handbook.

A single night in the hospital and a few months of therapy can pass $30,000. Once the at-fault driver's limit is paid, UIM is often the only other insurance money available.

UIM also matters when several people are hurt. If 3 injured people split a $60,000 per-accident limit, each may get far less than the $30,000 per-person cap.

What is the difference between "offset" and "excess" UIM?

The difference is whether your UIM limit is reduced by what the at-fault driver's insurer already paid. States split on this, and it can change a recovery by tens of thousands of dollars.

In an offset (or "reduction") state, your UIM pays your limit minus the other driver's payment. California works this way. Section 11580.2(p)(4) caps the insurer at your UIM limit "less the amount paid" by those legally liable.

In an excess (or "add-on") state, your UIM stacks on top of the other driver's payment. Georgia makes add-on coverage the default under O.C.G.A. §33-7-11, unless the insured affirmatively chooses reduced coverage in writing.

Maryland moved toward excess coverage recently. Policies issued on or after July 1, 2024 must include "enhanced" UIM, which is not reduced by the at-fault driver's payment. The first named insured can waive it in writing under Insurance §19-509.1.

What is stacking?

Stacking lets you add together the UM or UIM limits for more than one vehicle. Pennsylvania makes it the default under 75 Pa.C.S. §1738, where the stated limit "shall apply separately to each vehicle so insured."

A Pennsylvania household with 2 cars and $50,000 of UIM on each has $100,000 available if stacking wasn't waived. You can sign a waiver, and the statute says your premium must then be reduced.

Stacking rules differ from state to state, so check your declarations page for the words "stacked" or "unstacked" before you assume a limit.

What notice and arbitration rules apply?

UM and UIM claims have their own deadlines, and they can be shorter than the usual statute of limitations. Your policy's "notice" or "duties after an accident" section also requires prompt notice to your insurer.

In California, one of 3 things must happen within 2 years of the accident under §11580.2(i)(1). You sue the uninsured driver, reach a written agreement with your insurer, or formally start arbitration by certified mail.

Disputes in California go to arbitration, not a jury. Under §11580.2(f), fault and damages are decided "by agreement between the insured and the insurer or, in the event of disagreement, by arbitration."

Many policies in other states contain similar arbitration clauses. Read yours for who picks the arbitrator, who pays the fees and whether the award can be appealed.

Georgia uses a different approach. If you sue the at-fault driver, you must serve your UM carrier as if it were a named defendant under §33-7-11. Skipping that step puts the UM claim at risk.

Hit-and-run claims carry extra conditions, including police-report deadlines and physical-contact rules. See our guide to hit-and-run accident claims.

What should you do if the other driver is uninsured or underinsured?

1. Notify your own insurer in writing right away and say you may make a UM or UIM claim.
2. Get your full policy, including the declarations page and any signed rejection or stacking waiver.
3. Find out the at-fault driver's liability limit before accepting their insurer's payment. Check your policy for a "consent to settle" clause, which can require your insurer's approval before you settle with the other driver.
4. Calendar the UM deadline for your state, such as 2 years from the accident in California.
5. If your insurer disputes fault or value, talk to a lawyer before arbitration. Use our city rankings and our questions to ask a personal injury lawyer.