Underinsured motorist coverage

What it is

Underinsured motorist (UIM) coverage pays when the at-fault driver has insurance, but less than the injured person bought for themselves. In California it is part of the same coverage as uninsured motorist coverage, under Insurance Code 11580.2.

The California rule

Under section 11580.2, a vehicle is underinsured when its bodily injury limits are lower than the UM limits on the injured person's policy. UIM works on a difference-in-limits basis: what the UIM carrier owes is reduced by what the at-fault driver's insurer paid. A client with $100,000 in UIM who collects a $30,000 liability limit can recover up to $70,000 more, not $100,000. The coverage applies only after the limits of every applicable bodily injury policy have been exhausted by payment of a judgment or settlement. Disputes go to arbitration, as with UM claims.

Why it matters to a plaintiff firm

UIM is often where the remaining value of a serious case sits once a minimum-limits policy is paid. Firms confirm the client's UIM limits at intake, notify the UIM carrier before accepting the liability carrier's limits so its subrogation rights aren't prejudiced, and keep proof of the payment that exhausts the underlying policy. Read the client's policy for its own notice and consent terms. A policy-limits demand to the at-fault carrier is usually the first step.