What is the truth about underinsured motorist coverage?
Asked by: Oswaldo Kub | Last update: December 29, 2025Score: 4.1/5 (32 votes)
What is the disadvantage of uninsured motorist coverage?
Some cons to consider include: Additional cost: Adding uninsured motorist coverage to your policy typically increases your insurance premium, which can be financially burdensome. It is important to weigh the benefits against the added cost and your budget.
Is it necessary to have underinsured motorist coverage?
California law does not require you to carry uninsured motorist (UM) or underinsured motorist (UIM) coverage—so, legally, you don't need either one. However, UM/UIM is an important and commonsense coverage to carry.
Will my insurance go up if I use an underinsured motorist claim?
This is because when you cause an accident and have to make a claim to pay for damages caused to other people, your rates typically do increase. However, under California's proposition 103, insurance companies are not allowed to raise rates or drop a person because they made an uninsured motorist claim.
What are the dangers of being underinsured?
In the event that you are under-insured and you did need to make a claim, your insurer may 'void' the policy, that is cancel the policy altogether, by refunding all premiums paid. They may even recall any money paid out for previous claims. Alternatively, you may receive a reduced pay-out.
Underinsured Motorist Coverage Explained (2023)
Why is underinsurance a problem?
As employers and insurers continue shifting healthcare costs onto patients, more consumers will either avoid getting care or wind up with medical bills they cannot pay. Case in point: Underinsured adults reported having the highest rate of medical debt (44%) among all insurance types, per Commonwealth Fund.
What are three things that could happen if you are underinsured?
- The Costs of Emergency Home Repairs Can Add Up. ...
- You May Not Be Adequately Covered For Flood Damage. ...
- Your High-Value Items Might Not Be Sufficiently Covered. ...
- Your Policy May Be Cancelled. ...
- You May End Up With a High Deductible After An Accident.
Do insurance companies go after underinsured drivers?
While insurance companies may pursue uninsured drivers to recover claim costs, the process can be complex and time-consuming. Uninsured drivers involved in accidents should seek legal counsel promptly to protect their rights and explore possible compensation avenues.
What is the deductible for uninsured underinsured motorist coverage?
The amount of your UMPD deductible will vary based on your state. It usually falls in between $100-$1,000. Note that some states may have a separate deductible for hit-and-run claims. You may not have the option to choose your deductible amount for UMPD coverage.
Does underinsured motorist cover diminished value?
Diminished value is recoverable by both a third-party who's at fault and by your own policy's underinsured motorist coverage. The statute of limitations is 3 years from the date of the accident. Diminished value of your vehicle is recoverable in third-party cases only.
Will my insurance go up if I get hit by an uninsured driver?
California Law Forbids Insurers to Raise Rates
This makes California one of only two states in the country which has legislation on the books preventing insurance companies from arbitrarily raising rates after a consumer files an uninsured motorist claim following a no-fault accident.
What is the difference between collision and underinsured motorist coverage?
Uninsured Motorist Coverage: Protects you when the accident is caused by someone without insurance. Covers medical expenses and vehicle repairs. Collision Coverage: Pays for your car repairs no matter who's at fault. Usually comes with a deductible.
Does Progressive insurance offer underinsured motorist coverage?
With UM/UIM coverage, you can get more peace of mind knowing you're covered against these types of accidents. At Progressive, we make it easy to increase coverage limits or add this coverage anytime by logging into your account online or by calling us at 1-855-758-0941.
What is the best amount of uninsured motorist coverage?
I always recommend buying Uninsured Motorist coverage up to an equal amount with your third-party liability coverage, if you can afford it. This means, if you have $100,000 in liability coverage, you should buy $100,000 in Uninsured Motorist coverage.
What is an example of underinsured?
Being "underinsured" means a person has insurance coverage, but the limits may not be high enough to cover the full expenses of a claim. For example, each state requires auto liability coverage and sets minimum limits that drivers must purchase.
What does uninsured motorist coverage not cover?
In many states, uninsured motorist coverage will only pay for bodily injury and will not pay for damage to your car. There are some states in which you can only purchase uninsured coverage for property damage if you do not carry collision coverage.
Will my insurance go up if I use underinsured motorist claim?
Claims When You Are Not At Fault
One of the reassuring aspects of uninsured motorist claims in California is that they usually won't impact your insurance rates if you are not at fault in the accident.
Why are there so many uninsured drivers?
Reason 1: They Can't Afford it
Putting aside a situation where you get into an accident and have to pay out of pocket for repairs and medical bills (yours or others involved), driving uninsured also carries steep fines and a loss of your license. You also may be surprised by how affordable car insurance can be.
Is it worth suing an uninsured driver?
Suing the uninsured driver might not be worth it unless they are financially capable of satisfying a judgment. After a crash with an uninsured or underinsured driver, contact a car accident lawyer about your legal options.
What are your options if you are hit by a driver who is underinsured and the damage to your vehicle exceeds the other driver's insurance limits?
In some cases, you may be able to file a claim with your own insurance company. To do this, your policy will generally need to include underinsured motorist coverage (UIM.) Just like the name suggests, this type of insurance is designed to cover damages that exceed an under-insured driver's policy.
What is the effect of being underinsured?
If you're underinsured, there are some serious financial risks: Reduced Payouts on Claims: Insurance payouts are proportional to your level of coverage. If your home is only 50% insured, you'll only receive 50% of any claim amount. This could leave you struggling to cover the rest.
What are the risks of underinsurance?
Consequences of underinsurance
For instance, without adequate home insurance, homeowners may struggle to cover the costs of rebuilding their property after a weather event. Inadequate car insurance can leave policyholders unable to afford repairs or replacement following an accident.
What is the average clause underinsurance?
The 'Average' clause is the mechanism that insurers use to reflect this position at the time of any claim. In simple terms, the amount you receive once the figures are agreed is reduced in proportion to the degree you are under-insured.
Why is it bad to be underinsured?
In the event of a claim, being underinsured may result in economic losses for the policyholder, since the claim could exceed the maximum amount that could be paid out by the insurance policy. Underinsurance comes from having wrong coverage or insufficient coverage for your small business.