What Should You Do If You are Injured in an Accident with a Driver Who Doesn’t Have Enough Insurance?

Virginia law generally requires auto insurance policies issued in Virginia or covering vehicles principally used or garaged in Virginia to offer uninsured (“UM”) and underinsured (“UIM”) motorist insurance as part of the policy.  When choosing their insurance, many people may not give much thought to what this insurance is for and how it can protect them in the event of a motor vehicle accident.  UM insurance may apply when you are in an auto accident and the other driver has no insurance.  UIM insurance may apply when the other driver has some insurance but it is not enough to cover your injuries.  Although UM and UIM insurance can be a complicated subject, here is a general overview of what it is and how it works in Virginia.  Today we will discuss UIM insurance.

What is UIM insurance?

Very broadly, UIM insurance is insurance that is available when someone gets injured and there is some but not enough insurance available to pay for his or her injuries and damages.  It is part of the auto insurance protecting the person who is injured, rather than part of the auto insurance protecting the person responsible for the injuries.

UIM is underinsured motorist insurance—it applies when the other driver has some insurance but it is not enough to pay for the damages suffered in the motor vehicle accident.  Whether there is underinsurance cannot be known until comparing the amount of auto liability insurance available in the other driver’s policy to the amount of damages caused in the accident, which often requires a judgment in a lawsuit.

In Virginia, UIM insurance is governed by Virginia Code § 38.2-2206 and the case law interpreting it.

When does it apply?

UIM insurance applies when there is some auto liability insurance available for payment of a person’s damages suffered as a result of the ownership, maintenance or use of  a motor vehicle, but the liability insurance is not enough.  UIM insurance typically is required to pay after the auto liability insurer pays its full limits.

For example, if a person injured in an accident obtains a judgment for $100,000 against a person who only has $25,000 in auto liability insurance, then the injured person’s UIM insurance could potentially apply to pay for the $75,000 left over after the liability insurer pays its full $25,000.  In contrast, if the judgment is in the amount of $100,000 and the defendant has at least $100,000 in liability insurance, then there will be no underinsurance because there is enough liability insurance to pay for the whole judgment.

How does it work?

If you are injured in a motor vehicle accident,  you should inform your own auto insurer as soon as you can.  In addition to potentially providing other coverage available in your policy, your insurer may be required to provide UIM benefits if there is not enough liability insurance to pay for your injuries.  If an insurer providing UIM insurance is given the chance to participate in a lawsuit against the driver causing the accident, then that UIM insurer will be bound by the judgment and the amount of the recovery.

When a person obtains a judgment for injuries in an auto accident and there is not enough liability insurance available for payment, UIM insurance may apply to pay for some of the judgment amount.    Also, an insurer providing UIM insurance may have incentives to try to settle a claim even before going through a lawsuit all the way to judgment.  Getting the UIM insurer involved early in the process may help get the claim resolved more quickly and efficiently.

In some situations, more than one auto policy could provide UIM insurance.  In those cases, the policy covering the vehicle that the injured person was occupying (the “host vehicle”) is first in line for payment.  Next, other policies also providing UIM insurance in which the injured person is a named insured would then apply after the policy covering the host vehicle.  Lastly, other policies also providing UIM insurance in which the injured person is an insured, but not a named insured, would then apply after the policy covering the host vehicle.  Policies sharing the same level of priority share the responsibility for payment pro rata based on the limits of the UIM insurance that they issued.  There can be several insurers involved, and it often becomes difficult and confusing to navigate through all of their interests and positions when trying to resolve a claim for injuries.  Even when liability is clear, the assistance of an attorney experienced with UIM insurance may be needed to maximize the recovery and reach an efficient resolution.

How much UIM insurance should you have?

The amount of UIM insurance that a person should purchase as part of his or her auto insurance policy is an individual decision based upon several factors specific to each person.  In general, however, the lowest amount that can be purchased is $25,000 per person and $50,000 per accident for bodily injury , and $20,000 for property damage.  The highest amount that can be purchased is an amount equal to the liability insurance limits.  The default is that the limits of UIM insurance will be the same as the limits of liability insurance unless the policyholder waives those limits and clearly informs the insurer that he or she is choosing lower limits.

Higher UIM limits provide more protection.  Lower UIM limits save money by resulting in lower insurance premiums.  Before just checking a box for either the minimum limits or the maximum limits, please give careful consideration to the protection that you need and how much you are willing to pay for it in insurance premiums.  You may be willing to risk having the minimum UIM limits allowed to save some money, or you may want the full protection of UIM limits equal to your liability limits, or you may want to strike a balance to choosing something in between.  If you understand how UIM insurance can come into play to protect you, then you can make an informed choice that is right for you.