Within every Michigan auto insurance policy there is a portion of the policy that responds if you, as either the driver or owner of a vehicle, are responsible for injuring someone else. This is known as Bodily Injury Liability coverage.
This part of auto insurance is pretty widely understood: It’s a significant portion of the state-mandated coverage required for every vehicle in order to be legal to operate on Michigan roadways.
What can be a little confusing to most folks are two separate, but related coverage options commonly included with Michigan auto insurance policies: Uninsured & Underinsured Motorist Liability coverage. On the declarations pages (the pages summarizing an individual’s auto policy) these coverage options may be displayed as “uninsured/underinsured” or even simply UM/UIM.
While Bodily Injury Liability protects you in the event you are legally responsible for injuries to someone else, Uninsured and Underinsured Motorist Liability protects you if you are injured and the at-fault party either doesn’t have any auto insurance whatsoever or has an auto policy, but doesn’t have sufficient coverage to pay for your damages.
An example may help illustrate both possible situations:
A driver is texting, runs a red light, and crashes into your vehicle causing you to suffer serious injuries. Based on the extent of your injuries you may be legally entitled to recover damages from that driver.
Now, imagine the driver that hit you had no insurance (according to a recent WZZM13 report 1 in 5 Michigan drivers are uninsured). The likelihood is an uninsured driver also wouldn’t have sufficient cash or assets to pay for your damages. You would still be able to collect from your own auto insurance policy (up to your coverage limit) under Uninsured Motorist Liability coverage.
In that same scenario, let’s imagine the driver who hit you had insurance, but the limit of their coverage wasn’t enough to pay for your damages (the most common Bodily Injury Liability coverage limit I encounter when reviewing prospective client’s insurance policies is a woefully inadequate $100,000 per person). The damages you are legally entitled to recover may be considerably more than the at-fault driver’s insurance coverage – you would be able to collect the difference from your own insurance policy (again, up to your coverage limit) under the Underinsured Motorist Liability coverage.
One tremendous advantage of Uninsured & Underinsured Motorist Liability coverage is a judgment against the at-fault party is not required to establish the level of your damages and collect from your auto insurance policy. Your insurance company will work with you to determine the extent of your damages and can then, in turn, pursue the other driver to get paid back (known as subrogation).