What is underinsured motorist coverage?

Under Montana law, a motorist is required to purchase only $25,000 of bodily injury coverage per person with a maximum of $50,000 per collision. To save money, many people purchase this minimum amount of automobile insurance coverage. When a person purchases an automobile insurance policy with these limits, it is the maximum amount of money the insurance company will pay regardless of the costs you or your family incur from injuries.

It is extremely difficult to get any more money beyond the insurance policy limits from a negligent driver. If a judgment exceeds the negligent driver's net worth, that driver may file for bankruptcy, leaving you with little more than the minimum insurance limits. Because litigation is so expensive, it usually makes little sense to pursue the negligent driver for anything more than the insurance proceeds they purchased, even when those proceeds are the mandatory minimum limits.

Of all the products available in an automobile insurance policy, the most valuable you can purchase is underinsured motorist coverage. The underinsured portion of an insurance policy provides for payment over and above the amount of the maximum amount available under the other person's policy. Typically, you can purchase as much underinsured motorist coverage as bodily injury coverage. In other words, if you purchase a $100,000/$300,000 bodily injury policy, most insurance carriers will allow you to purchase a $100,000/$300,000 underinsured motorist policy.

The most misunderstood term in the insurance industry may be “full coverage.” Most people believe they have purchased "full coverage" but have not purchased underinsured motorist coverage. Underinsured motorist coverage can be the most valuable policy a family purchases as it truly provides peace of mind that medical bills and lost wages will be covered following a serious collision. The next time you talk with your insurance agent, I highly recommend that you purchase as much underinsured motorist coverage as possible. UIM is relatively inexpensive and is the best hedge your family has against a financial catastrophe. However, as I explained above, your insurance carrier may become every bit as adversarial when you want to use underinsured motorist coverage as they are when defending against paying claimants for a collision where you are at fault.

UIM coverage extends to wrongful death claims. We have the highest rate of drunk drivers in Montana and are, per capita, one of the deadliest places to drive in the United States. Montana differentiates between a wrongful death claim and a survivorship claim, making an insurance claim much more complicated than necessary. Under Montana law, a person must survive for an “appreciable period of time” for his or her family to be eligible to receive future damages.