What Is UM and UIM Insurance and Why Does It Matter to You?

Auto insurance is not a riveting subject, and most people don’t pay much attention to it beyond the basics. You know that the law requires you to carry automobile insurance and that it protects you from liability in case you cause an accident. What you probably haven’t considered, though, is what happens if you are the victim and the at-fault party does not have the means to compensate you for your injuries. 

In California, every owner of a registered motor vehicle must maintain minimum liability insurance coverage of up to $15,000 per person, $30,000 per occurrence and $5,000 for property damage. However, just because this is the law does not mean everyone abides by it. In a difficult economy, more and more people are downgrading to minimum coverage despite the personal exposure it can generate. The sad fact is that $15,000 is inadequate to compensate victims for even moderate injuries. 

To protect yourself, you can purchase UM and/or UIM insurance coverage from your own provider: 

  • UM — Uninsured motorist coverage compensates you if you are injured by a driver who does not have insurance.
  • UIM — Underinsured motorist coverage compensates you if you are injured by a driver who has insurance but does not have adequate coverage for your entire loss. For instance, if a driver with minimum coverage insurance hits you and causes $100,000 in injuries, your UIM provider would cover the $85,000 shortfall, subject to the policy limits, which amount you can choose. 

It is important to remember that your own insurance company may resist paying on your UIM or UM claim.