During 15 years of working with our clients in California, one situation has recurred – a driver is involved in a serious traffic accident, and the other party’s insurance is not enough to cover all the costs. Recently, we heard from Ana, who was injured on the 101 freeway in Los Angeles. While waiting in traffic, she was struck by another vehicle at high speed. Medical bills quickly exceeded $100,000, and the driver who caused the accident had only minimum insurance of $15,000.
Anna’s story opens up an important question facing many of our fellow Californians – what happens when the costs of an accident far exceed the insurance of the driver who caused the accident?
What is Underinsured Driver Insurance (UIM)
Underinsured driver’s insurance is part of your insurance policy that allows you to receive additional financial protection in the event that the driver responsible for the accident does not have sufficient coverage to compensate for the damage. This insurance differs from Uninsured Motorist Coverage (UM), which protects if a driver that is completely uninsured.
In California, the UIM is not mandatory but is highly recommended due to the high percentage of drivers with minimal insurance. According to the California Department of Transportation, as many as 16% of drivers have no insurance at all, while the percentage of those with inadequate coverage is even higher.
What You Need to Know About Your Rights
The legal system in California allows you to be compensated even when you are partially responsible for the accident. Your compensation will be reduced by a percentage of your fault – if the damage is $100,000 and you are 20% responsible, you will get $80,000.
As a victim of a traffic accident in California, you are entitled to compensation:
- All medical expenses, present and future
- Lost wages
- The cost of rehabilitation
- Non-material damage (such as pain, suffering, or trauma)
- Material damage to the vehicle
Statistics of Uninsured Motorists in the US
Based on Insurance Research Council (IRC) data, 14.0% of drivers in the U.S. were uninsured in 2022. The highest rates of uninsured drivers were recorded in the following states:
- District of Columbia – 25,2%
- New Mexico – 24,9%
- Mississippi – 22,2%
- Tennessee – 20,9%
California traditionally has an uninsured driver rate of about 16%.
Why Do You Need a UIM in California
- Large number of drivers with minimal insurance: California law requires drivers to have at least $15,000 per person for bodily injury and $30,000 per accident. These sums are far from sufficient if you experience a severe collision with serious injuries.
- Rising medical costs: The costs of treating injuries after an accident are rising rapidly. For example, emergency medical care and subsequent rehabilitation costs can run into the tens of thousands of dollars.
- Loss of income: If you are unable to work because of an injury, financial stress can make your situation even more difficult.
Example: Imagine that you were injured in an accident where the driver had only a $15,000 minimum insurance policy, and your medical expenses amounted to $50,000. Without UIM coverage, you will have to make up the difference yourself.
Differences Between Underinsured Motorist Coverage and Uninsured Motorist Coverage
Uninsured motorist coverage comes into effect when:
- The driver who caused the accident has no insurance
- In a hit-and-run accident
- The driver has no valid or expired insurance
Underinsured motorist coverage is activated when:
- The at-fault driver has insurance, but it is insufficient to cover your damages
- The damages exceed the at-fault driver’s insurance limit
- It applies only after the at-fault driver’s insurance has been exhausted
How Does UIM Coverage Work
If you are involved in an accident and the driver responsible for the accident does not have adequate insurance, your UIM coverage goes into effect. Here’s what it looks like in practice:
- Confirmation of insufficient insurance: First, it is determined that the responsible person does not have adequate insurance.
- Filing Claims: You file a claim with your insurance company for the difference.
- Damage Compensation: Your insurance covers an amount that exceeds the limits of the responsible driver’s policy, up to the limit of your UIM coverage.
In California, where minimum insurance is often inadequate, additional insurance protection against uninsured and underinsured drivers is not a luxury – it is a necessity. Do not wait for an accident to bring this to your mind.
Our law firm with our car accident lawyers has helped hundreds of clients in similar situations. Call us for a free consultation and learn more about your rights and protection options.
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