What is underinsured motorist coverage (UIM) in Colorado?

UIM pays for your bodily injury harms and losses that are the result of a not at fault motor vehicle crash with an underinsured driver.

A motorist is considered underinsured if his or her liability coverage is not enough to pay the full amount you are legally allowed to recover as damages for your harms and losses (such as lost wages, medical bills, permanent disability, and pain and suffering).

This is different from uninsured motorist coverage (UM), which pays for your bodily injury damages that are the result of a not at fault motor vehicle crash with an uninsured or hit and run driver.

In other words, underinsured motorist coverage (UIM) covers harms and losses above the amount you are able to recover from the at fault party’s liability coverage.

What is an example of an underinsured motorist?

Let’s look at an example for what UIM covers you if you are injured through the negligence of another driver and that driver does not have enough liability insurance to cover your harms and losses.

For example, let’s say someone runs a red light and collides with a vehicle you are driving, and you are hurt. Further, you have lost income, lost earning capacity, and medical bills (not even counting noneconomic losses for pain and suffering) totaling $125,000, but the other driver had liability insurance for only $100,000.

Do you take it in the shorts for a $25,000 loss (not even counting your pain and suffering) from a crash that was not your fault, that you did not ask to have happened, that you did not want to happen??  Not if you had the foresight to purchase UIM coverage for your own motor vehicle.

Let’s say you have a $50,000 UIM coverage limit, then you could put in a claim against your insurance company for your losses in excess of the other driver’s $100,000 policy, up to the amount of your UIM  limit ($50,000 in this example).

In simple terms, your UIM coverage pays you the difference between the at-fault driver’s coverage limit, and your actual damages (up to your policy’s limits). If you have UIM, you are then able to receive the FULL amount of your damages vs. only what the underinsured motorists policy pays if your coverage limits are high enough.

What if I own more than one motor vehicle?

Am I entitled to claim UIM coverage for each vehicle I own for just this one crash? Yes and no.

If you have a separate insurance policy and paid a separate UIM premium for each vehicle, then the answer is yes. Each vehicle you have covered has its own coverage.

However, if you have a single policy or endorsement for UIM issued for a single premium covering multiple vehicles, then your insurance company may include language in your policy limiting the UIM coverage to apply only once per crash.

Make sure you understand your policy documents and speak with your auto insurance agent for information regarding the individual coverage limitations for each vehicle.

Can my insurance company raise my rates if I put in a claim for UIM?

It would not be a smart thing to do since the crash is not, by definition, your fault. Though there is  room in some cases for the insurance company to argue that the insured bears some fault (such as driving while distracted and not taking action as a result to avoid the crash), in which case they could raise your rates.

The insurance company would probably be inviting a lawsuit for bad faith insurance if they raised your rates and you bore no fault in causing the crash.

Is UIM coverage mandatory in Colorado?

No. It is not mandatory to carry a UIM policy in Colorado, but the insurance company must offer the coverage to you and, if you do not want it, you have to sign a rejection of it.

By the way, if you have uninsured motorist coverage (called UM; UM covers you if the other driver has absolutely no automobile insurance, as opposed to an insufficient amount of insurance), then you automatically have UIM.

Do I need underinsured motorist coverage?

If you are not in the position to cover medical expenses and other damages when you are in a car crash caused by someone else, it is an affordable option. Deciding whether or not you need UIM is a personal choice, but is highly recommended to ensure you get the compensation needed to cover medical expenses, pain and suffering, car repairs, and other related expenses. Talk to your car insurance agent to help you choose your options, and decide if underinsured motorist coverage is right for you.

In my opinion, it is worth it as you can never predict an unexpected accident, and it protects you when the responsible person does not have high enough coverage limits to recover all of your losses.

Estimated Percentage of Uninsured Drivers In Colorado

Source: WalletHub

According to Uninsured Motorists, 2017 Edition, Insurance Research Council, 13.3% of Colorado Drivers are uninsured.

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Matthew S. Martin is a Personal Injury Attorney in Pueblo, Colorado that focuses on making clients whole again after suffering a personal injury due to the negligence of someone else.

The types of cases I handle include auto accidents, car crashes, wrongful death, medical malpractice and legal malpractice.

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