One of the most frustrating moments in a personal injury case can come after liability is clear and medical bills are mounting, only to learn that the at-fault driver's insurance policy has a low coverage limit that will not come close to covering the full extent of the damages. California requires drivers to carry only minimum liability insurance, and many policies are written at or near that minimum. This article explains what options may be available when the at-fault driver's coverage is insufficient.
California's Minimum Insurance Requirements
California law requires drivers to carry liability insurance or another form of financial responsibility to cover injuries and property damage they cause. These are minimum requirements, not caps on what a driver could be personally responsible for, but many drivers carry only the state-required minimum. For a driver who causes a serious injury, such as a fracture requiring surgery, a spinal injury, or a traumatic brain injury, those minimum limits are often exhausted quickly by medical bills alone, long before lost wages and pain and suffering are considered.
How You Find Out the Policy Limits Are Too Low
Insurance companies are not always forthcoming about policy limits early in a claim. Sometimes the first sign of a low-limits situation is an unusually quick settlement offer for the full policy amount, often before the extent of your injuries and future treatment needs are known. A formal request for policy limit information, sometimes made through an attorney, can confirm what coverage actually exists before any settlement decision is made.
Underinsured Motorist (UIM) Coverage
If you carry underinsured motorist coverage on your own auto policy (which insurers in California are generally required to offer, though you can reject it in writing), that coverage may be available to make up the difference between what the at-fault driver's insurer pays and the value of your actual damages, up to your own policy's UIM limits.
A UIM claim is filed against your own insurance company, even though the fault lies entirely with the other driver. This can feel counterintuitive, and it often becomes more adversarial than people expect, because your insurer now has a financial stake in minimizing what it pays on the claim. Most UIM policies require you to notify your insurer promptly and, in many cases, to obtain your insurer's consent before settling with the at-fault driver's insurer for policy limits, to preserve certain subrogation rights.
California UIM coverage has two important limits. First, it applies only if your UIM policy limit is higher than the at-fault driver's liability limit; if the limits are equal, there is generally no UIM claim. Second, UIM coverage is reduced by whatever the at-fault driver's insurer pays. For example, $100,000 in UIM coverage after a $15,000 policy-limits payment leaves up to $85,000 available, not $100,000.
Uninsured Motorist (UM) Coverage
A related but distinct type of coverage, uninsured motorist coverage, applies when the at-fault driver has no insurance at all, as well as in certain hit-and-run situations where the responsible driver cannot be identified. Like UIM coverage, a UM claim is made against your own policy, and the same general caution about protecting your rights and notifying your insurer promptly applies.
Other Potential Sources of Recovery
Depending on the facts of the case, other sources of recovery may exist beyond the at-fault driver's auto policy and your own UM/UIM coverage. Examples can include an employer's insurance if the at-fault driver was acting within the scope of employment at the time of the crash, a rideshare company's applicable coverage if the driver was logged into a rideshare app, an applicable umbrella liability policy the at-fault driver may carry personally, or, in some cases, a claim against another independently negligent driver or responsible party, depending on the facts. Identifying every available source of coverage is often one of the most important parts of building a claim when the primary policy is insufficient.
Steps to Take If You Suspect Coverage Will Be Insufficient
- Review your own auto policy declarations page to confirm whether you carry UM/UIM coverage and at what limits.
- Avoid signing a release or accepting a settlement from the at-fault driver's insurer without understanding how it may affect a later UIM claim.
- Notify your own insurer of the accident promptly, even if you expect the other driver's insurance to pay first.
- Keep thorough records of medical treatment and lost income, since a full picture of your damages is essential to any UM/UIM claim or arbitration.
Underinsured and uninsured motorist claims involve important procedural steps and deadlines that can affect your right to recover. If you were injured by a driver who did not have enough insurance to cover your losses, contact Yadegar Law Firm, PC for a free, confidential consultation to discuss what coverage may be available in your case.
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This article is general information about California law and is not legal advice. Reading it does not create an attorney-client relationship. Deadlines apply to injury claims and can be much shorter when a public entity is involved, so speak with a lawyer about your specific situation.