Uninsured vs. underinsured: the difference
- Uninsured motorist (UM) coverage pays when the at-fault driver has no liability insurance, and in some circumstances when the driver cannot be identified, as in a hit-and-run.
- Underinsured motorist (UIM) coverage pays when the at-fault driver has insurance, but not enough to cover your damages.
Both are part of your policy. You paid for them, but your insurer will evaluate the claim the way any defendant would.
How UM/UIM works in each state
California
- Auto policies must include uninsured motorist coverage unless the named insured waives or reduces it by a written agreement in the form the statute requires. Cal. Ins. Code § 11580.2(a)
- UM deadline: within two years of the accident you must sue the uninsured driver, reach agreement with your insurer, or formally demand arbitration by certified mail. Cal. Ins. Code § 11580.2(i)
- UIM exhaustion: UIM generally does not apply until the limits of the at-fault driver's bodily injury policies are exhausted by settlement or judgment and proof is given to your insurer. Cal. Ins. Code § 11580.2(p)(3)
- Offset: your UIM payment is your UIM limit minus what the at-fault side paid. Cal. Ins. Code § 11580.2(p)(4)
- Proposition 213 can bar non-economic damages for uninsured drivers and owners, including in UM claims. Cal. Civ. Code § 3333.4
Arizona
- Insurers must offer UM and UIM coverage in writing, up to your bodily injury limits. Your declarations page is treated as the final expression of what you bought. A.R.S. § 20-259.01(A)–(B)
- UIM applies when the total of all applicable liability limits is less than your total damages. It pays the difference up to your UIM limit. A.R.S. § 20-259.01(G)
- UM and UIM are separate coverages that apply to different situations. A.R.S. § 20-259.01(H)
- Where several policies cover different vehicles, an insurer may limit recovery to one policy you select per accident, if the policy says so. A.R.S. § 20-259.01(H)
California's two-year UM rule is a trap. It is separate from the deadline to sue the at-fault driver, and missing it can forfeit the UM claim. In a California UM case, one of the required steps (suit, agreement or a formal arbitration demand) must happen within two years of the accident. Cal. Ins. Code § 11580.2(i)
Who is covered
UM/UIM coverage typically protects the named insured and household family members, even when they are pedestrians, cyclists or passengers in someone else's car, as well as other occupants of an insured vehicle. Policy language controls, so the policy and every household policy should be reviewed.
When the at-fault driver's limits are low
Minimum liability limits are $30,000 per person in California (policies issued or renewed since January 1, 2025) and $25,000 in Arizona. Cal. Veh. Code § 16056; A.R.S. § 28-4009 A serious injury can exceed those amounts many times over. A UIM claim usually requires settling with the at-fault driver for their policy limit first, while following your insurer's notice and consent requirements so you do not jeopardize the UIM claim.
How insurers resist UM/UIM claims
Eli spent years on the insurance side. Common tactics include:
- Treating their own policyholder as an adversary in recorded statements and examinations under oath
- Disputing whether a hit-and-run vehicle existed or made contact
- Arguing pre-existing conditions and treatment gaps
- Offering a fraction of the remaining limits
- Delaying arbitration
An insurer also owes its policyholder a duty of good faith and fair dealing in handling claims. When an insurer unreasonably delays or denies, that duty can matter.
Videos: dealing with insurance companies
Minimal impact DOES NOT mean minimal injury.
Why little or no visible vehicle damage does not prove you were not hurt, and how insurers use "low impact" arguments against injured people.
Before You Give Insurance a Recorded Statement, Watch This
What to know before you talk to the other driver's insurance company or agree to give a recorded statement.
Before I Fought for You, I Defended Insurance Companies. Here’s What You Should Know.
Eli explains how his years defending insurance companies shaped the way he now represents injured people.
10 Things Insurance Companies Don’t Want You to Know After an Accident
Ten things insurance companies do not volunteer after an accident, and why knowing them early can help your claim.
UM/UIM FAQ
Will my premiums go up if I make a UM claim?
That depends on your insurer and the circumstances. California restricts surcharges for accidents where you were not principally at fault. Don't let the fear of a rate change stop you from using coverage you paid for.
Do UM/UIM claims go to court?
Many policies require disputes over fault and damages to be decided by arbitration rather than a jury. Arbitration is a real hearing with evidence and witnesses, and it needs the same preparation as a trial.
The at-fault driver offered their policy limits. Should I accept?
Before accepting, make sure doing so will not jeopardize your UIM claim. Your policy may require notice to your insurer and an opportunity to respond.
This page explains general rules of California and Arizona law. It is not legal advice, laws change, and every case depends on its own facts. Reading it or contacting the firm does not create an attorney-client relationship.
