Uninsured & Underinsured Motorist Coverage.

Overview

Uninsured motorist (UM) and underinsured motorist (UIM) coverage is among the most important topics in California personal injury practice. An estimated 15-20% of California drivers carry no insurance, and many more carry only the $15,000/$30,000 minimum. UM/UIM coverage is often the primary or supplemental source of recovery for injured clients.

This guide covers Insurance Code 11580.2, coverage triggers, hit-and-run claims, binding arbitration, stacking rules, the UIM credit, and the bad faith leverage unique to first-party claims.

Statutory Framework: Insurance Code 11580.2

California Insurance Code 11580.2(a)(1) requires every auto liability insurer to offer UM/UIM coverage equal to the insured's bodily injury liability limits. The insured may reject or select lower limits only by signed written rejection. If no valid rejection exists, UM/UIM defaults to the liability limits.

Uninsured Motorist Claims

UM coverage applies when the at-fault driver has no liability insurance, is a hit-and-run driver, or has an insolvent insurer. Hit-and-run claims require a police report within 24 hours and may require physical contact between vehicles -- always check the specific policy language, as many insurers have broadened coverage.

Underinsured Motorist Claims

UIM coverage applies when the at-fault driver's limits are less than the insured's UM/UIM limits. The insured must exhaust the at-fault driver's limits before pursuing UIM, and must give the UIM insurer written notice before settling with the at-fault driver.

The UIM credit: your maximum UIM recovery equals your UIM policy limits minus the third-party settlement. Example: $100,000 UIM limits minus $30,000 third-party settlement equals $70,000 maximum UIM recovery.

Arbitration of UM/UIM Claims

Insurance Code 11580.2(f) provides that UM/UIM disputes are resolved through binding arbitration. Each party selects one arbitrator; the two select a neutral third. The arbitration is governed by the California Arbitration Act (CCP 1280-1294.2) with limited grounds for vacating awards.

Stacking of UM/UIM Coverage

Inter-policy stacking (multiple policies) is permitted under Insurance Code 11580.2(p), but total recovery cannot exceed the highest single policy limit. Intra-policy stacking (multiple vehicles on one policy) is not allowed. Check every auto insurance policy in the client's household at intake.

Common UM/UIM Disputes

Coverage disputes include whether the at-fault vehicle was truly uninsured or underinsured, permissive use issues, and resident relative status. Damages disputes mirror third-party claims: causation, reasonableness of treatment, future damages, and valuation. Because UM/UIM claims are first-party claims, the insurer faces bad faith exposure for unreasonable denials, delays, or lowball offers.

Cross-References

• Insurance Coverage — comprehensive coverage analysis
• Opening the Insurance Policy — excess exposure strategies
• Proposition 213 — uninsured driver limitations on recovery
• Motor Vehicle Accidents — auto accident litigation
• Property Damages — UM property damage coverage
• Economic Damages — calculating damages in UM/UIM claims

Common Questions

Sources & Citations