Underinsured/Uninsured Motorists Mandatory Coverage

Because a substantial number of owners and operators of cars and trucks in the United States operate their vehicles with inadequate amounts of insurance coverage or no insurance coverage at all, many auto insurance policies contain provisions for underinsured motorist coverage, sometimes abbreviated UIM, and uninsured motorist coverage, sometimes abbreviated UM. The purpose of underinsured motorist coverage and uninsured motorist coverage is to provide persons insured under motor vehicle insurance policies and innocent third parties with some of the insurance protection they would have enjoyed if the underinsured and uninsured drivers with whom they are involved in accidents had maintained adequate insurance coverage on the uninsured or underinsured vehicle.

Requirements for providing or offering underinsured motorist coverage and uninsured motorist coverage are not uniform. In some states, it is mandatory for insurers to provide a specified amount of underinsured motorist and uninsured motorist coverage; the amounts that are specified may coincide with the minimum required liability insurance coverage in the state. In other states, insurers are merely required to make such coverage available to the purchasers of auto insurance policies. In yet other states, the subject of underinsured motorist and uninsured motorist coverage is considered to be a voluntary matter between the insurer and the insured.

The reason for the difference in approaches taken on the question of whether underinsured and uninsured motorist coverage should be made mandatory is that the business of insurance in the United States, including motor vehicle insurance, has traditionally been regulated under the law of each state rather than under a single unified system of federal law. The legal requirements for underinsured motorist and uninsured motorist coverage, and the application of those requirements to the everyday conduct of insurers and insureds, can obviously vary widely from state to state, and can be found in the state statutes regulating the business of insurance and the decisions of courts dealing with insurance-related cases.