Understanding Uninsured and Underinsured Motorist Insurance Coverage in Michigan

Two of the most overlooked and underutilized types of auto insurance are uninsured and underinsured motorist insurance. These critical insurance policies are mandated in some states, but not in Michigan. Because they aren’t required by law and because many people mistakenly believe that no-fault insurance (which IS mandated by law) covers everything, most drivers don’t purchase policies protecting them against accidents involving uninsured or underinsured motorists.

This leaves many accident victims in the lurch when injured by a motorist without insurance or without enough insurance to cover the damages suffered. And with nearly 1 in 5 Michigan drivers operating motor vehicles without insurance, it doesn’t make sense to go without sufficient coverage.

To understand why uninsured and underinsured motorist insurance, known as UM and UIM policies respectively, are so important, it’s necessary to first understand what they cover and what the differences between them are.

Uninsured Motorist Coverage

Uninsured motorist coverage is an insurance policy that covers damages caused by a driver who does not have insurance. It includes damages caused by drivers who can’t be identified, as often occurs in hit-and-run accidents. Most UM policies cover both bodily injuries and damage to property, though the amounts covered are usually different. How much of your damages get covered depends on the limits of your policy. The higher your limits, the more expensive your premiums will be.

In order to recover damages in a UM claim, the damages involved must be such that they would be eligible for recovery had the at-fault driver been properly insured or, in the case of a hit and run, had the at-fault driver been identified. Since the Michigan no-fault insurance covers all medical expenses for injuries incurred in auto accidents, medical expenses cannot be included in a UM claim. Likewise, non-economic damages for things like pain and suffering cannot be included in a UM claim unless the injuries cause death, serious impairment or permanent disfigurement and would qualify for recovery of non-economic damages under Michigan’s no-fault laws.

Underinsured Motorist Coverage

Underinsured motorist coverage applies to damages caused by a driver who does not have enough insurance to cover the total damages involved. If the driver only has $50,000 in liability coverage for a third-party claim but the victim is awarded $70,000 in non-economic damages, a UIM policy would kick in for the remaining $20,000 if the victim had such a policy. (In Michigan accidents most injury victims are covered by no-fault insurance, and UIM policies only come into play if the victim suffers catastrophic injuries qualifying them for recovery of non-economic damages, or damage to property other than the cars involved in the accident is greater than $1 million.)

It’s important to note that UIM coverage kicks in only after the at-fault driver’s liability insurance has paid out to the policy limits. In the above example, the victim would not be eligible for a UIM claim until the at-fault driver’s insurance company had paid out the full $50,000 of the policy limit. It’s also important to note that anyone with a UIM policy is likely to have their claim denied if they settle with the at-fault driver and/or their insurance company without permission of their own insurer — even if they settle for the full amount of the policy limit. Using the same example from above, if the victim accepted a settlement from the at-fault driver’s insurance company for the full $50,000 without permission from their UIM insurer, the UIM insurer is likely to deny their UIM claim for the remaining $20,000.

Why Michigan Drivers Need Uninsured and Underinsured Motorist Insurance

Why does a Michigan driver need uninsured and underinsured motorist insurance if they have no-fault insurance? Because circumstances may arise in which you could have recovered damages from an at-fault driver if they’d had enough insurance to cover it. Such incidents require very serious injuries or property damage in the State of Michigan, but are more likely to arise in accidents outside of Michigan or if the accident involves a non-resident driver with a vehicle registered out of state.

UM and UIM policies can be applied toward the following for Michigan drivers:

• Excess economic damages above those required to be paid by Michigan no-fault insurance
• Non-economic damages from Michigan accidents resulting in death, catastrophic injury or permanent disfigurement
• Damage to property other than moving vehicles in excess of $1 million caused by an accident in Michigan
• Damages resulting from a Michigan accident involving a non-resident occupying a vehicle registered in another state
• Damages resulting from an accident in another state without no-fault insurance laws

Note that uninsured and underinsured motorist insurance policies will NOT pay for damage to a policy holder’s own car involved in an accident even if the policy holder was not at fault. To cover damage to one’s own car, a driver needs a collision insurance policy, which is optional in Michigan.

Help with Recovery of Injury Related Damages in Michigan

Even with no-fault insurance and uninsured and undersinsured motorist insurance policies, many Michigan drivers and passengers injured in auto accidents don’t get the compensation they need for their injuries. The aid of a skilled personal injury lawyer typically results in recovery of more damages than injury victims are able to achieve on their own. Whether you need to pursue recovery of damages from an at-fault driver or from your own insurance company who wrongfully denied or reduced your claim, the personal injury attorneys at Sachs Waldman, P.C., can help. Call our Detroit personal injury attorneys’ office at 1-800-638-6722 to schedule a free consultation.