Uninsured and Underinsurance Automobile Coverage

Uninsured Coverage

First, you need to understand the difference in these two types of coverages. Uninsured coverage (abbreviated as UM on your declarations page) is for situations where the person who caused the accident did not have insurance at the time of the accident (even though to not have insurance is against the law). It is required in all automobile insurance policies and covers personal injuries and property damage you might sustain due to another person’s negligence in causing the wreck. If you want to buy more than minimum uninsured coverage (which is a good idea), then you also must acquire underinsurance coverage.

Underinsurance Coverage

Underinsurance coverage (UIM) applies when your injuries are greater than the amount of coverage in the policy of insurance for the person who caused the wreck. It provides additional coverage for your personal injuries only and your carrier gets a credit for any payment made by the insurance company of the at-fault driver. We strongly recommend the purchase of UM/UIM coverage which can be acquired up to $1,000,000. Keep in mind that personal injuries include not only medical bills, but lost wages, disability and pain and suffering and even your wrongful death.

Here is an example of how UIM coverage works. Suppose you were severely injured in an automobile accident caused by someone with minimum limits of coverage of $30,000. Also, assume you had purchased $100,000 of UIM coverage at the time of the accident.  Then, the carrier for the at-fault driver would tender their limits of $30,000 and you could recover another $70,000 from your own UIM carrier ($100,000 – $30,000 credit from other driver).

We strongly recommend that you acquire UM/UIM limits of at least $100,000.

The North Carolina Department of Insurance has an excellent brochure explaining the types of coverage. For more information on this topic, please go to:

North Carolina Automobile Insurance Coverages.

Please feel free to share this blog with your friends and family on this often misunderstood area of the law.