How to File an Underinsured Motorist (UIM) Claim

Underinsured motorist coverage is a first-party auto insurance coverage that pays for your bodily-injury (and in some states property-damage) losses when the at-fault driver has some liability insurance but not enough to cover your damages. UIM is purchased on your own policy and is paid by your own insurer.

Two carrier explanations capture the core mechanic. State Farm describes UIM as applying when "the at-fault driver's insurance limits aren't enough to cover your damages or injuries" (State Farm). Progressive defines it as protection "if you're hit by a driver without enough auto insurance coverage" (Progressive). Both confirm that UIM is gap coverage: it bridges the difference between what the at-fault driver's policy pays and what you actually need.

The structure of a UIM claim differs fundamentally from a third-party liability claim. In a third-party claim against the at-fault driver, you are an adversary of their insurer; in a UIM claim, you are claiming against your own contract with your own insurer. That contractual relationship triggers a duty of good faith on the insurer and exposes the insurer to first-party bad-faith remedies if it unreasonably denies, delays, or low-balls the claim. It also imposes obligations on you: prompt notice, cooperation, and (most critically) the consent-to-settle process.

Several variants and adjacent coverages share UIM's DNA:

• UIMBI (UIM Bodily Injury): the standard variant, covers your medical bills, lost wages, and pain and suffering when the at-fault driver is underinsured.
• UIMPD (UIM Property Damage): available in some states; covers vehicle damage when the at-fault driver's property-damage liability limit is insufficient.
• SUM (Supplementary UM/UIM): New York's combined UM/UIM coverage, which must match the policy's liability limits if elected.
• UM (Uninsured Motorist): the sister coverage that applies when the at-fault driver has no insurance, is unidentified (most hit-and-run cases), or whose carrier has become insolvent.

The Insurance Research Council's 2025 publication, "Uninsured and Underinsured Motorists: 2017-2023," found that 33.4 percent of U.S. drivers were either uninsured or underinsured in 2023, a roughly 10-percentage-point increase from 2017 (IRC, 2025). The IRC compared the frequency of UM and UIM claims to the frequency of bodily-injury claims using data from 17 insurers representing roughly 55 percent of the private-passenger auto market.

Two trends drive the increase. First, the uninsured rate climbed from 12.6 percent in 2017 to 15.4 percent in 2023 (III, Uninsured Motorists Facts and Statistics). Second, the underinsured rate climbed from 10.6 percent in 2017 to 18.0 percent in 2023, a 7.4-point jump that reflects rising medical costs and stagnant state-minimum liability limits. Most state minimums (commonly $25,000 per person) have not been meaningfully increased in decades, while average bodily-injury claim severity has climbed steadily.

For an injured claimant, the takeaway is simple: across most of the country there is a material chance the at-fault driver carries the state minimum or no insurance at all. In high-rate states, the chance approaches half. UIM is not a hypothetical; for serious injuries, it is often the difference between being made whole and being stuck with the bill.

UIM is triggered when three conditions converge: the at-fault driver carries some liability insurance, that insurance is exhausted or insufficient to cover the claimant's damages, and the claimant is covered under a UIM policy. Common scenarios:

• You are the driver of your insured vehicle and are hit by an underinsured at-fault driver. UIM under your own policy applies.
• You are a passenger in someone else's vehicle hit by an underinsured driver. Most UIM policies follow the named insured and resident family members across vehicles, so UIM under your own policy can still apply.
• You are a pedestrian or cyclist struck by an underinsured driver. Most policies extend UIM to the named insured and family members in non-vehicle scenarios.
• Multi-vehicle collision with limits exhausted. When several claimants share a single at-fault driver's per-accident limit and your share is insufficient, UIM may apply to the gap.
• Rideshare passenger or driver. When app-state-specific rideshare UIM limits are exceeded, your personal UIM may stack as excess (state-dependent).
• Government vehicle with capped damages. Some state and federal tort claim acts cap recoveries below your damages; UIM may apply to the uncapped excess if the policy permits and the underlying coverage is treated as "underinsured."

Two common scenarios that are not UIM despite looking like it: hit-and-run cases (typically UM, since the at-fault driver is unidentified and treated as uninsured) and accidents caused by a driver with zero coverage (UM, not UIM).

Uninsured motorist (UM) and underinsured motorist (UIM) coverages are sister protections, often sold together as a single endorsement. They differ in trigger, proof requirements, and (in many states) statutes and stacking rules. The Cornell Legal Information Institute summarizes UM as covering injuries when "the other driver did not have car insurance and the other driver was at fault" (Cornell LII), while UIM applies when the at-fault driver has insurance but not enough.

Source citations: III state-by-state mandate chart; Cornell LII Wex; Insure.com stacking survey; carrier explanations from Progressive and State Farm.

Two core methodologies coexist across the United States, and the methodology used in your state can change the math by tens or hundreds of thousands of dollars on the same set of facts. Read your declarations page; the policy will identify the approach.

Difference-in-Limits (gap coverage)

UIM pays the difference between your UIM policy limit and the at-fault driver's liability limit, capped at the UIM limit. If your UIM limit is $100,000 and the at-fault driver carried $25,000 in liability coverage, the maximum UIM available is $75,000, regardless of total damages.

Difference-in-Damages (excess coverage)

UIM pays the difference between your total damages and the at-fault driver's actual payment, capped at the UIM limit. If your damages are $100,000 and the at-fault driver paid $25,000, UIM pays up to $75,000 (capped by the UIM limit). Difference-in-Damages is generally more favorable to the insured because it does not deduct the at-fault driver's entire limit; it deducts only what was actually paid.

Worked example: $200,000 in damages, $25,000 at-fault limit, $100,000 UIM

• At-fault driver pays: $25,000 (their full liability limit).
• Remaining unrecovered damages: $175,000.
• UIM pays (Difference-in-Limits): $75,000 ($100,000 UIM minus $25,000 at-fault limit). Total recovery: $100,000.
• UIM pays (Difference-in-Damages): $100,000 (the UIM limit). Total recovery: $125,000.
• Unrecovered damages in either case: $75,000 to $100,000, plus any stacking or other coverage.

Setoffs further reduce UIM payments in many states. Common setoffs include PIP/MedPay already paid, workers' comp benefits for the same injury, and some health-insurance recoveries (subject to your state's subrogation and made-whole rules). Comparative fault is also applied: your damages are reduced by your percentage of fault before the UIM calculation runs.

The process below assumes a typical multi-state scenario: a clearly liable at-fault driver, identified, with insufficient liability limits, and a UIM endorsement on your own policy. Order matters; skipping a step (especially Step 5) can void the entire UIM claim.

A consent-to-settle clause requires the insured to notify and obtain the consent of the UIM carrier before settling any claim against the at-fault tortfeasor. The clause exists because the UIM carrier's right of subrogation (its right to recover from the at-fault driver) is destroyed if the insured signs a release without the carrier's consent.

Once notified, the UIM carrier has two options:

1. Consent to the settlement and waive subrogation. The insured then signs the at-fault driver's release and proceeds with the UIM demand.
2. Advance the at-fault driver's policy limits to the insured within the notice period (commonly 30 days). The insurer thereby preserves its subrogation rights against the at-fault driver. The insured does not sign the at-fault driver's release; instead, the UIM carrier pursues the at-fault driver for the advanced amount.

North Carolina's 30-day advancement window is illustrative; many other states have analogous statutory or common-law rules (Wallace Pierce, NC procedure). California's Insurance Code section 11580.2 imposes related notice and procedural rules on UM/UIM claims. Some states require the carrier to prove prejudice before invoking the clause; others enforce it strictly.

The mechanical fix is simple: before signing any release with the at-fault driver, send written notice to your UIM carrier identifying the offer, the at-fault driver's policy limits, the carrier's name and claim number, and a deadline (per policy or 30 days) for the carrier to consent or advance. Keep proof of delivery.

UIM deadlines are not the same as the underlying tort statute of limitations. Three deadlines run on parallel tracks, and the shortest controls.

• Tort statute of limitations against the at-fault driver: commonly two to four years; varies by state.
• State-specific UIM statute of limitations: some states have a separate UIM SOL. Arizona, for example, requires written notice of intent to pursue UIM "within three years after the date of the accident" under A.R.S. 12-555, and requires the claimant to request arbitration or file suit within an additional three years after the notice.
• Policy contractual deadline: many UIM policies impose internal deadlines for notice, suit, or arbitration that are shorter than the statute of limitations. Read the policy.

California provides a partial protection. Insurance Code section 11580.2 requires the UM/UIM insurer, when a claim is pending, to give the insured written notice of the applicable statute of limitations at least 30 days before it expires. Failure to give the notice tolls the deadline by 30 days.

Two practical takeaways: (1) calendar three deadlines, not one, and act on the earliest; (2) if your state has a notice-of-intent rule (like Arizona), missing the notice can defeat coverage even if the underlying tort SOL has not expired.

Stacking is the practice of combining UIM limits across multiple vehicles or policies to increase the available recovery. About 30 states allow some form of stacking; approximately 18 prohibit it (Insure.com state survey).

Two types of stacking

• Intra-policy stacking: combining UIM limits across multiple vehicles on the same policy. Example: if a policy covers three vehicles each with $100,000 UIM, intra-policy stacking yields $300,000.
• Inter-policy stacking: combining UIM limits across multiple policies in the same household. Example: a married couple with two separate policies, each carrying $100,000 UIM, may combine to $200,000.

State patterns

• Allow some form of stacking: Alabama, Arkansas, Colorado, Delaware, Florida, Georgia, Kentucky, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Vermont, Virginia, West Virginia, Wisconsin, and Wyoming.
• Prohibit or restrict stacking: Alaska, Arizona, California, Connecticut, Idaho, Illinois, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, North Dakota, South Dakota, and Washington.
• Florida default: stacked unless the insured signs a state-approved rejection in writing.
• Texas: inter-policy stacking generally allowed; intra-policy stacking restricted depending on policy form.
• North Carolina: inter-policy stacking permitted; intra-policy prohibited.

State stacking rules change with statutes and case law. Verify the current rule with your state department of insurance or counsel before relying on this list.

The Insurance Information Institute identifies approximately 14 states that mandate UIM coverage by statute: Connecticut, Illinois, Kansas, Maine, Maryland, Minnesota, Nebraska, New Jersey, New York, North Carolina, North Dakota, Oregon, South Dakota, and Vermont (III, Compulsory Auto/Uninsured Motorists). The III separately identifies about 20 jurisdictions that mandate UM coverage.

In most other states, insurers are required to offer UIM coverage and the insured may reject it in writing. Rejection is widespread because UIM is an additional coverage layer with a per-policy premium; many drivers decline UIM not realizing how often they will need it. The IRC's 18.0 percent underinsured-driver rate makes the case for opting in.

State law also dictates the form of UIM coverage. New York's "Supplementary UM/UIM" (SUM) endorsement, for example, must match the policy's liability limits if elected. Some states require UIM to be offered at limits equal to liability; others permit lower UIM limits. Read the declarations page on every renewal.

State laws change. Confirm with the state department of insurance for the most current rule. The NAIC publishes an Uninsured Motorists topic page (content.naic.org/insurance-topics/uninsured-motorists) that links to current state-by-state data.

A UIM claim is a first-party claim against your own insurer, governed by the contract between you and the carrier. That contract carries an implied duty of good faith and fair dealing in every state. When the insurer breaches that duty, first-party bad-faith remedies become available, and they often dwarf the underlying contract amount.

Common bad-faith conduct

• Unreasonable denial of a documented UIM claim.
• Unreasonable delay in evaluating, investigating, or paying a clear claim.
• Low-ball offers unsupported by the documented damages.
• Failure to conduct a reasonable investigation.
• Demanding cumulative or duplicative documentation as a stall tactic.
• Misrepresenting policy terms or coverage amounts.
• Refusing to negotiate within policy limits when the claim plainly justifies the limit.

Remedies vary by state

• Most states allow recovery of the contract amount plus consequential damages.
• Many states allow attorney fees in first-party bad-faith actions.
• Several states impose statutory penalties: Texas's 18 percent prompt-payment penalty under the Insurance Code; Washington's Insurance Fair Conduct Act; many others.
• Some states allow multiplied or punitive damages in egregious cases.

Bad-faith claims are typically brought in the same lawsuit that seeks UIM contract damages, after the insurer's response makes the case for bad faith. Documenting every adjuster communication, every demand and offer, and every delay in writing is what builds the bad-faith record.

UIM almost never operates alone. Several other coverages may apply concurrently, and the order of recovery and setoff rules can shift tens of thousands of dollars in or out of your pocket.

• Personal Injury Protection (PIP): mandatory in 12 no-fault states (Florida, Michigan, New York, Massachusetts, Delaware, Hawaii, Kansas, Kentucky, Minnesota, North Dakota, New Jersey, Pennsylvania, Utah, with state variations). PIP pays medical and sometimes wage benefits regardless of fault. Most UIM policies allow setoff for PIP already paid.
• Medical Payments (MedPay): optional in most states; pays medicals up to the limit regardless of fault. Some states allow MedPay setoff against UIM; others prohibit it.
• Health insurance: covers medical bills, then asserts a subrogation lien against the third-party recovery. Most states apply a "made-whole" doctrine that limits subrogation when the recovery does not fully cover damages, but rules vary widely.
• Workers' compensation: if the accident occurred in the course and scope of employment. Workers' comp covers medical and a percentage of wages. The carrier typically asserts a lien against any third-party or UIM recovery.
• Other UIM policies (stacking states): household policies and additional vehicles on the same policy may be combined where state law permits.
• Umbrella policies with UIM endorsement: umbrella UIM is uncommon but powerful when present; it can add $1 million or more to available limits.
• Government tort caps: when an at-fault government driver's recovery is capped (federal FTCA limits, state tort claim caps, and notice deadlines as short as six months in California under Cal. Gov. Code § 911.2), UIM may apply to the uncapped excess if policy language permits.

• Settling with the at-fault driver without UIM consent. The single most common mistake. Always notify the UIM carrier in writing first.
• Missing the policy contractual deadline. Many policies impose deadlines shorter than the underlying tort SOL. Read the policy.
• Underdocumenting damages. Adjusters reduce undocumented claims aggressively. Preserve every record, photograph, and receipt.
• Giving recorded statements to the UIM carrier without preparation. Adjusters use early recorded statements to lock in inconsistencies later.
• Failing to identify all potentially applicable policies. Identify every household policy, every umbrella, every UIM endorsement, every vehicle involved before settling.
• Assuming UIM does not apply because you were a passenger. Most UIM policies follow the named insured and resident family members across vehicles and into pedestrian and cyclist scenarios.
• Settling before reaching MMI. Future medical bills and lost income are usually not recoverable after a release is signed.
• Not reading the declarations page. The methodology (Difference-in-Limits vs Difference-in-Damages), the limit, the offset rules, and the deadlines are all there.

Government and Authoritative Data

• Insurance Information Institute, "Background on: Compulsory Auto/Uninsured Motorists" (state mandate chart for UM and UIM).
• Insurance Information Institute, "Facts + Statistics: Uninsured Motorists" (15.4 percent uninsured rate in 2023; state-by-state extremes).
• Insurance Research Council, "Uninsured and Underinsured Motorists: 2017-2023" (2025) (18.0 percent underinsured rate; 33.4 percent combined; Colorado 49.7 percent UIM high; Mississippi 28.2 percent UM high).
• NAIC, Uninsured Motorists topic page (Property and Casualty Insurance Committee white paper; 2021/2022 Auto Insurance Database Report).

Statutes and Regulations

• Arizona Revised Statute 12-555 (UM/UIM coverage; claims; time limits; written notice within three years of accident; arbitration or suit within three years of notice).
• California Insurance Code § 11580.2 (UM/UIM mandatory offer; 30-day pre-deadline insurer notice tolling; police-report and physical-contact requirements for hit-and-run UM).
• Cal. Gov. Code § 911.2 (six-month government tort claim deadline; relevant when UIM applies to government-vehicle scenarios).
• Florida Statute 627.727 (UM/UIM coverage and stacking-rejection requirements); Florida Statute 627.736 (PIP, 14-day medical care requirement).

Carrier Explanations and Coverage Mechanics

• Progressive, "UM/UIM: What Is Uninsured Motorist Coverage?" (definitions, UMBI/UMPD/UIMBI/UIMPD, hit-and-run coverage).
• State Farm, "What Is Uninsured and Underinsured Motorist Coverage?" (UIM applies when at-fault driver's limits are insufficient).
• GEICO, "Uninsured and Underinsured Motorist Coverage Explained" (carrier explanation of trigger and scope).
• Cornell Legal Information Institute, "Uninsured Motorist Clause" (Wex definition; mandatory in 20 states plus D.C.).

Stacking

• Insure.com, "Stacking Your UM/UIM Auto Insurance Coverage" (intra- vs inter-policy definitions; state-by-state stacking permissions).
• Searcy Law, "Florida UM Stacking" (Florida default-stacked rule and rejection form).

Procedure, Consent-to-Settle, and Bad Faith

• Wallace Pierce, "How Do I Open an Underinsured Motorist Claim Under My Own Auto Policy After a Crash?" (North Carolina procedure; 30-day advancement window).
• Wallace Pierce, "What Information Do I Need to Start a UIM Claim?" (initial UIM filing checklist).
• Schwartz, "Six Steps to Finalizing UIM Settlement with the Liability Carrier" (consent-to-settle workflow).
• Parker & Parker, "Bad Faith Denial of UM/UIM Claims in Illinois" (first-party bad-faith framework).
• Law Lion, "Understanding an Insurer's Obligation for UM/UIM Coverage" (good-faith duties owed by first-party insurers).

Settlement and Representation Data

• Insurance Research Council, "Attorney Involvement in Auto Injury Claims" (2014 study; 35,000+ closed claims; 3.5x lift for represented claimants).