Skip to Content
Virginia Injury & Will Contest Attorneys

What is Uninsured/Underinsured Motorist Coverage?

two toy cars, one toppled over like a car accident

Virginia requires all drivers to carry a minimum amount of car insurance. Still, almost 11 percent of drivers are uninsured. Should an individual have no insurance, they must annually pay an uninsured motorist fee of $500 to the Department of Motor Vehicles (DMV.) Contrary to the belief of many, this fee is not insurance. It provides no benefits and is really nothing more than a penalty for those who choose to drive with no insurance.

Uninsured Motorist Fee

While simply paying the $500 fee may seem tempting, this only allows a driver to legally operate their vehicle without car insurance. Should an uninsured driver be at-fault in an accident, that driver will have to pay for any resulting damages out-of-pocket. Purchasing car insurance is highly recommended and encouraged.

Uninsured/Underinsured Motorist Coverage

According to Virginia law, § 38.2-2206, a car insurance policy cannot be issued unless it contains UIM coverage.

Uninsured/underinsured motorist (UIM) coverage is a type of insurance that helps protect drivers and passengers in the event that they are involved in an accident with an uninsured or underinsured driver. UIM coverage is very important and often overlooked coverage. This type of coverage can help pay for medical expenses, property damage and other costs associated with an accident caused by a driver who has no insurance or too little coverage.

Imagine that you are seriously hurt in a crash caused by an uninsured driver who runs a stop sign. Who pays your hospital bill or wage loss if the other driver has no money and no insurance? The answer to that question hopefully is – YOUR insurance company, thanks to the UIM coverage you have purchased! It will pay the losses for which the other driver is liable, but only up to the limits of your UIM policy limits. In Virginia, the minimum limits for a policy of insurance (and for UIM coverage) is $30,000. If your losses are higher than $30,000, you are on your own – unless you have purchased a policy with higher limits. These days, it does not take a very serious injury to run up medical bills of $30,000, so we recommend that you look at your limits and buy a policy with much higher limits. It is important protection for you and your family.

So, what if that other driver who ran the stop sign and puts you in the hospital has insurance, but it’s just not enough to cover your bills? This is where it gets a little complicated. Your insurance company gets a credit for the amount of the other driver’s coverage and is responsible for any remaining balance after that credit is applied. So, let’s just say you have bills totaling $75,000. If the other driver has a liability policy with limits of $30,000 and you have UIM limits of $30,000, your insurance company will pay you nothing, because there is nothing left after applying the $30,000 credit. But if you have UIM limits of $50,000, the other driver’s insurance would pay your first $30,000 and your insurance would pay the next $20,000 that takes it to your limit of $50,000 – which still means that you are stuck with unpaid bills. If, however you have UIM coverage of $100,000, then the other driver’s insurance still pays the first $30,000 and your insurance pays the next $45,000 to cover all of your bills.

Got that? The credit is just too complicated. When many people buy their UIM coverage, they think that the whole amount of the coverage is going to be available if you need it. They get an unwelcome surprise when they learn that a credit is applied and that the UIM policy they have paid for might actually provide no coverage at all.

The lessons here are twofold. First, the law is broken and needs to be fixed. More on that below. Second, you need to look at your insurance policy and talk to your insurance agent and make sure that you have enough coverage.

Senate Bill: 754 Motor Vehicle Insurance; Underinsured Motor Vehicle

In late January of 2022, Senator Mark Obenshain introduced a bill that will fix the law and make sure that if you bought UIM coverage and you need it, it will be available. It will greatly benefit those involved in accidents caused by underinsured drivers. Under the bill:

● UIM coverage will be paid without credit for the bodily injury and property damage coverage available.

● Insurance carriers must provide underinsured coverage with limits equal to the uninsured coverage limits.

This legislation is not immediately effective, but will apply only to policies issued after July 1, 2023. When it takes effect, if you have UIM policy limits of $30,000, you get the benefit of it if you need it, no matter what the limits are of the other driver’s liability coverage.

Protecting Yourself with Obenshain Law Group

At Obenshain Law Group, we have been offering legal guidance and fighting for your rights for more than three decades. We have experience representing clients in all types of car accidents, and we know how to get you the compensation you deserve. If you have been injured, do not wait to contact us - we can help you file a claim and get started on your recovery.

Call us today at (540) 318-7360 or fill out a form online for a free initial consultation.