What an underinsured motorist claim does
An underinsured motorist claim is a way to recover money from your own insurance company when the other driver's insurance doesn't cover all your accident costs. If the at-fault driver has liability insurance but the limit is too low to pay for your medical bills, vehicle damage, or lost wages, your underinsured motorist coverage steps in to bridge the gap.
This is different from an uninsured motorist claim, which applies when the other driver has no insurance at all. Underinsured motorist coverage exists specifically for situations where the other driver is insured — just not insured enough.
Most states allow you to file this claim against your own policy once you've exhausted the other driver's liability limits. The process involves notifying your insurance company, documenting your damages, and negotiating a settlement or pursuing a lawsuit if necessary.
Key Takeaways
- Underinsured motorist coverage pays you when the at-fault driver's insurance limit is lower than your total damages.
- You must first collect the maximum amount available from the other driver's liability policy before your underinsured motorist coverage kicks in.
- Your own insurance company handles the underinsured motorist claim, not the other driver's insurer.
- You will need medical records, repair estimates, proof of lost income, and documentation of the accident to support your claim.
- Many states require you to notify your insurer within a specific timeframe, often 30 to 90 days after the accident.
How underinsured motorist coverage works
Underinsured motorist coverage is an optional add-on to your auto insurance policy. When you purchase it, you choose a coverage limit — typically $25,000, $50,000, $100,000, or higher, depending on your state and insurer. This limit is what your own insurance company will pay you if you file an underinsured motorist claim.
The claim only activates after you've collected everything the other driver's liability insurance will pay. For example, if the at-fault driver has a $30,000 liability limit and your total damages are $75,000, you would first collect the full $30,000 from their insurer. Then you would file an underinsured motorist claim with your own company for the remaining $45,000 — assuming your underinsured motorist limit is at least $45,000.
Your insurance company will not pay more than the difference between what you collected from the other driver and your actual damages. They also will not pay more than your underinsured motorist coverage limit. If your damages exceed both the other driver's limit and your own underinsured motorist limit, you would absorb the remaining cost yourself.
Steps to file an underinsured motorist claim
Step 1: Report the accident to your insurance company. Contact your insurer as soon as possible after the accident, even if you plan to file an underinsured motorist claim later. Most policies require notification within 30 to 90 days. Provide the date, time, location, other driver's information, police report number if one was filed, and a description of what happened. Your insurer will assign a claims adjuster to your case.
Step 2: Collect the other driver's insurance payment. Work with the other driver's liability insurer to settle their portion of your claim. This is a separate process from your underinsured motorist claim. The other insurer will review your damages and either pay their full liability limit or negotiate a lower amount. Once you reach a settlement with them, you will receive a check and sign a release form agreeing not to pursue further claims against their policy.
Step 3: Gather documentation of all your damages. Collect medical records and bills from all healthcare providers who treated you, repair estimates or invoices for vehicle damage, pay stubs or tax returns showing lost income, receipts for out-of-pocket expenses like rental cars or medications, and any other evidence of financial loss related to the accident. Keep copies of everything.
Step 4: Notify your insurer that you are filing an underinsured motorist claim. Send a written notice to your insurance company stating that you intend to file an underinsured motorist claim. Include the amount the other driver's insurer paid, your total damages, and the difference you are claiming. Attach copies of your documentation. Send this by certified mail so you have proof of delivery.
Step 5: Negotiate with your own insurance company. Your claims adjuster will review your documentation and either offer a settlement or deny the claim. If they offer a settlement that covers your remaining damages, you can accept it. If the offer is too low or they deny the claim, you have the option to dispute their decision or pursue a lawsuit.
What damages you can recover
An underinsured motorist claim can cover medical expenses, including hospital bills, surgery, physical therapy, prescription medications, and ongoing treatment related to injuries from the accident. It also covers vehicle repair or replacement costs if your car was damaged beyond what the other driver's liability insurance paid.
You can recover lost wages if the accident prevented you from working, as well as loss of earning capacity if your injuries permanently reduce your ability to earn income. Some claims also include pain and suffering damages, which compensate you for physical pain, emotional distress, and reduced quality of life caused by the accident.
Rental car costs, transportation expenses, home care or childcare services you needed while recovering, and other accident-related expenses may also be covered. The exact damages your claim can include depend on your state's laws and your insurance policy language.
When your insurer might deny the claim
Your insurance company can deny an underinsured motorist claim if you did not carry underinsured motorist coverage at the time of the accident. Some states require insurers to offer this coverage, but you must purchase it — it is not automatic. If you declined it when you bought your policy, you cannot file a claim for it later.
An insurer may also deny the claim if you failed to notify them within the required timeframe, usually 30 to 90 days after the accident. If you settled with the other driver's insurer without your own insurer's knowledge or consent, your company may deny the claim on the grounds that you did not follow the proper procedure.
If the accident was your fault rather than the other driver's fault, your underinsured motorist claim will be denied because this coverage only applies when another driver is at fault. Similarly, if you were partially at fault, your recovery may be reduced based on your state's comparative fault rules.
Disputes and next steps if your claim is denied
If your insurance company denies your underinsured motorist claim or offers a settlement you believe is too low, you can file a formal appeal with the company. Request a written explanation of the denial, review your policy language carefully, and submit a detailed response addressing each reason the company gave for the denial.
If the appeal does not resolve the dispute, you can file a complaint with your state's insurance commissioner or department of insurance. This is a free process that can pressure the insurer to reconsider. You can also hire an attorney to pursue a lawsuit against your own insurance company, though this is typically a last resort because litigation is time-consuming and costly.
Some policies include arbitration clauses, which require disputes to go to arbitration rather than court. Check your policy to see if this applies to you. Arbitration is usually faster and less expensive than a lawsuit, but the arbitrator's decision is binding and you have limited appeal options.
How underinsured motorist claims affect your rates
Filing an underinsured motorist claim typically does not increase your insurance rates because you are not at fault for the accident. Your insurer is paying a claim that results from another driver's negligence, not from your own driving behavior. Rate increases are usually reserved for at-fault accidents, traffic violations, or claims you file under your own collision or comprehensive coverage.
However, this varies by insurer and state. Some companies may review your claims history and adjust your rates if you file multiple claims in a short period, even if none are your fault. Before filing, you can ask your claims adjuster whether the claim will affect your rates.
If you are concerned about rate increases, you can also choose to settle the claim yourself without involving your insurance company, though this means paying out of pocket for damages the other driver's insurance did not cover. This option only makes sense if your damages are small enough that you can afford to absorb them.
Frequently Asked Questions
Can I file an underinsured motorist claim if I was partially at fault for the accident?
It depends on your state's fault rules. In "comparative fault" states, you can file a claim even if you were partially at fault, but your recovery will be reduced by your percentage of fault. In "contributory negligence" states, you may not be able to file at all if you were any percentage at fault. Check your state's rules or ask your insurance adjuster.
What if the other driver's insurance company and my insurance company disagree about who was at fault?
Your insurer will investigate the accident independently. If they determine the other driver was at fault, they will proceed with your underinsured motorist claim even if the other driver's insurer disputes liability. If your own insurer concludes you were at fault or that liability is unclear, they may deny the claim, and you would need to appeal or pursue legal action.
How long does an underinsured motorist claim take to resolve?
Most claims are resolved within 30 to 90 days if you and your insurer agree on the settlement amount. If you dispute the offer or the claim is denied, the process can take several months or longer. Arbitration typically takes three to six months, while a lawsuit can take one to three years.
Can I file an underinsured motorist claim if the other driver was uninsured?
No. If the other driver had no insurance at all, you would file an uninsured motorist claim instead, which is a separate coverage. Underinsured motorist coverage only applies when the other driver has insurance but the limit is too low.
Do I need an attorney to file an underinsured motorist claim?
You can file a claim without an attorney, especially if your damages are straightforward and your insurer cooperates. However, an attorney can be helpful if your claim is denied, the insurer's offer is significantly lower than your damages, or liability is disputed. Many attorneys work on contingency, meaning they take a percentage of your settlement rather than an upfront fee.