Uninsured vs. Underinsured
When you are involved in a car accident and the other driver has no insurance or has the minimum policy limits, you can recover damages from your uninsured (UM) or underinsured (UIM) coverage.
NOTE: Under North Carolina General Statute § 20‑279.21 "Motor vehicle liability policy" defined, all drivers must carry UM/UIM insurance.
UM coverage pays for damages when the at-fault party has no valid insurance or is a hit-and-run driver. Underinsured motorist coverage pays when the at-fault driver's liability coverage is inadequate to cover the damages.
For example, when you sustain accident injuries estimated at $75,000, and your UM coverage has a policy limit of $50,000, then the insurance company only pays $50,000 for your bodily injury damages. If UM policy limits are $75,000, then all your damages are covered.
By comparison, with UIM coverage, your policy pays for what the other at-fault driver’s policy did not cover. If the other driver’s liability coverage limits are $30,000 and your policy limit is $50,000, and damages were $75,000, you would think your damages would be covered, but they would not. The first $30,000 is covered by the other driver’s policy. Your insurance company then subtracts $30,000 as paid damages and covers the remaining $20,000. It does not pay the full $50,000. This still leaves you with $25,000 in unpaid damages.
Insurance companies do not offer UIM with minimum required limits of $30,000 per person or $60,000 per accident because the underinsured motorist already has this minimum coverage. Your insurance company would not pay anything above the minimum amount anyway.
Please note: These numbers are merely examples and vary between cases.