What is Uninsured and Underinsured Insurance Coverage?

By Thomas Weidner | Personal Injury

Both uninsured and underinsured motorist coverage are required provisions of automobile policies in the State of Minnesota. These coverages are first party recovery, meaning your own policy will pay you for damages caused by another if that party does not carry liability insurance (uninsured) or does not carry enough liability insurance to cover your damages (underinsured). An insured as it relates to uninsured and underinsured coverage may include:

  1. The named insured(s);
  2. The named insured’s spouse and/or resident relative;
  3. Any person occupying the insured vehicle; and
  4. Any person, who sustains damages, is entitled to recover by a person described above.

What is the difference between uninsured and underinsured motorist coverage?

Uninsured motorist coverage (UM) is a policy that covers you and/or your family if an at-fault driver does not have liability insurance. Whereas, underinsured motorist coverage (UIM) is a policy that covers you and/or your family if a driver does not have enough liability insurance to compensate you for your injuries.

What is the minimum coverage limits in Minnesota?

The required minimum coverage for both uninsured and underinsured is $25,000/$50,000. This means up to $25,000 for injuries to one person or $50,000 for injuries to two or more people.

How does uninsured motorist coverage work?

The most common of uninsured motorist claims are:

  1. The negligent party does not carry any liability coverage on their vehicle.
  2. Hit-and-run or phantom vehicles.

The most common is where a negligent party does not carry any liability insurance. A claim is then made with the injured parties own insurance company and becomes contract claim between the parties.

The next circumstance where a claim may be brought is hit-and-run or phantom vehicles. The terms are synonymous with one another and are defined within the Minnesota Statute definition of an uninsured motorist. Under this claim another vehicle does not need to come into direct contact with the insureds vehicle. However proper care needs to be taken in these circumstances and you cannot file a hit-and-run/phantom vehicle claim just because you do not have the other driver’s insurance information.

How does underinsured motorist coverage work?

Underinsured motor coverage applies when the liability limits are less than the amount to compensate an injured person for their damages. To determine possible coverage all damages need to be evaluated and the liability claim needs to be settled. Notice needs to be provided to the underinsured motorist insurance carrier of possible settlement. If the damages exceed the liability claim, then an underinsured motorist claim may be brought. However, there are exceptions and limitations, such as if the collision involves multiple vehicles.


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