What is the difference between uninsured motorist coverage and underinsured motorist coverage?
- Uninsured motorist coverage (“UM”) is designed to protect drivers and passengers if the at-fault driver in an accident does not carry automobile liability insurance coverage.
- Underinsured motorist coverage (“UIM”) is designed to protect drivers and passengers if the at-fault driver has insufficient automobile liability insurance coverage to pay for your injuries.
For example, if you are in a vehicle accident and sustain $50,000 in damages due to injuries, but the at-fault driver only has the minimum $15,000 bodily injury coverage, UIM may help bridge the financial gap.
Twenty-one states and the District of Columbia require UM. Just fourteen states require UIM. In Arizona, Colorado and California, however, UM and UIM are not mandatory. Nevertheless, each state has its requirements with regard to UM and UIM.
Arizona law states that every insurer writing a motor vehicle liability policy must offer, in writing, UM and UIM to their insureds in an amount equal to the insured’s liability coverage. If the insureds reject this coverage, insurers must prove compliance with the statute by having their insureds sign a Department of Insurance-approved form that indicates selection or rejection of such coverage.
Colorado law states it is mandatory that the insurance provider offer collision, medical-payments, and uninsured-motorist coverage. Such coverage may only be rejected by the insured in writing.
California law requires insurers to include UM and UIM in automobile policies, unless the insurer and insured execute a written waiver in a specific format that is laid out in California law. If the insured does not sign the three-page waiver, UM and UIM are made part of the insurance policy.
Automobile accidents occur every day. In fact, more than 75,000 people are injured each day due to vehicle accidents in the US. So, whether you are heading out for a hike, going to relax by the ocean, or taking your family to a Spring Training baseball game, make sure that you understand and have implemented your state’s automobile insurance requirements.