What exactly is UIM (underinsured or uninsured motorist) coverage?

Uninsured and Underinsured Motorist Coverage

Uninsured (UM) and Underinsured (UIM) motorist insurance coverage is like a floating layer of coverage that you purchased or the owner of the car you were in purchased in the event the at fault driver did not have coverage or enough liability coverage for your damages. The insurance company with the UM or UIM coverage stands in the shoes of the offending driver and becomes our adversary.
In Washington State, UM and UIM coverage is mandatory and everyone with liability coverage has it unless they signed a written waiver rejecting the coverage.

The insurance policies dictate how much coverage is available and how a dispute over the value of the damages is decided. Some policies provide for binding arbitration with either a panel of three arbitrators or a single arbitrator. Other policies require the insured to sue their insurance company in the county where the insured lives or where the accident happened. In cases where the policy calls for arbitration, Washington law requires that the fees of the arbitrator or panel of arbitrators are to be paid by the insurance company.

UM and UIM also applies in cases of hit and run drivers or victims of an accident with a “phantom vehicle”.

Sometimes, when the damages justify it, we can bring the underinsured motorist claim prior to bringing the third party claim. If we obtain an award greater than the third party limits, this is an added factor that puts pressure on the third party carrier to pay the limits of coverage on that part of the third party.

When the circumstance arises that the third party carrier has low liability coverage limits and wants to pay them, we have to be careful to offer the UIM carrier the chance to “buy out” the claim before we release the third party. Failure to do so can result in a forfeiture of the UIM claim because we would extinguish the UIM carrier’s right to subrogation to recover against the at fault party of the amounts they pay you for the UIM claim or amounts they already paid in PIP benefits. Even though the UIM carrier will rarely, if ever, “buy out” the claim, they are entitled under Washington law to be given adequate notice of the tender of the third party limits.