Policy limits set the real ceiling
Liability policies are written as three numbers, such as 30/60/25: $30,000 per injured person, $60,000 per crash and $25,000 for property damage. The insurer will rarely pay more than the limit, however serious your injuries. If several people are hurt, they share the per-crash limit.
Underinsured motorist coverage
Your own underinsured motorist (UIM) coverage pays when the at-fault driver’s limit is too low. It comes in two kinds, set by your state and policy:
- Excess (add-on): pays on top of the at-fault driver’s limit, up to your UIM limit
- Reducing (offset): pays your UIM limit minus what the at-fault policy paid, so it adds nothing if your limit is not higher than theirs
Uninsured motorist (UM) coverage pays when the driver has no insurance or flees.
Collecting beyond the policy
Lawsuits against an individual for more than their policy rarely produce money, because most drivers with minimum coverage have few assets. Other sources may exist: an employer if the driver was working, a vehicle owner, or a bar that over-served the driver.
Check your declarations page
Your auto policy’s declarations page lists your UM and UIM limits. Many people carry less than they think. Raising UM/UIM is one of the cheapest ways to protect yourself.
Questions people ask
What happens if my damages exceed the policy limits?
Your UIM coverage can pay the difference up to its limit. Beyond that, recovery depends on other insurance or the driver’s assets.
Will my rates go up if I use UIM coverage?
In most states insurers cannot raise rates for a UIM claim when you were not at fault.