Understanding Underinsured Motorist Coverage with a Washington Lawyer

What is Underinsured Motorist Coverage (UIM) in Washington State?

Underinsured Motorist Coverage (UIM) is a critical component of your auto insurance policy designed to protect you financially when you are injured by a driver whose liability insurance limits are insufficient to cover the full extent of your damages. Washington State law (RCW 48.22.030) requires all auto insurance companies to offer UIM coverage. While you have the right to reject this coverage in writing, doing so is rarely advisable given the high number of underinsured drivers on the road.

An underinsured motorist is defined as a driver whose bodily injury liability limits are less than the damages you have sustained and less than your own UIM policy limits. It is not merely a comparison of their limits to yours; it is a calculation of their fault, their available limits, and your total incurred damages. For example, if an at-fault driver has a $25,000 policy limit, but your medical bills, lost wages, and pain and suffering total $100,000, that driver is underinsured. Your own UIM policy would then act as a secondary layer of coverage to bridge the financial gap.

How UIM Coverage Works: A Step-by-Step Process

Navigating a UIM claim is a complex, multi-step process that requires strict adherence to policy conditions and state law.

1. The Initial Collision and Third-Party Claim: The process begins with a collision caused by another negligent driver. You, or your attorney, will file a claim against the at-fault driver’s liability insurance policy. This is often referred to as the “third-party claim.”

2. Exhaustion of the At-Fault Driver’s Limits: Before your UIM coverage can be accessed, you must first obtain a settlement for the full amount of the at-fault driver’s bodily injury liability limits. Your UIM insurer will typically require written confirmation that these limits have been “exhausted” or paid in full.

3. Formal UIM Claim Submission: Once the third-party limits are exhausted, you formally submit a UIM claim to your own insurance company. This involves providing them with all evidence of liability and damages, including police reports, medical records, bills, wage loss documentation, and a demand package outlining the full value of your claim.

4. The UIM Investigation: Your insurance company will then investigate your claim, much like the at-fault driver’s company did. It is crucial to understand that during this phase, your insurer is effectively stepping into the shoes of the at-fault driver. Their financial interest is in minimizing the payout, creating a potential conflict of interest.

5. UIM Settlement Negotiation: Your Washington lawyer will negotiate with your UIM carrier to obtain a fair settlement. This negotiation is based on the total value of your claim, minus the amount already recovered from the at-fault driver.

6. Arbitration Clause: Most Washington auto insurance policies contain a clause requiring UIM disputes to be resolved through binding arbitration rather than a public lawsuit. If you and your insurer cannot agree on the value of your UIM claim, the matter will be presented to a neutral third-party arbitrator who will hear evidence and render a final, binding decision.

Why You Need Significant UIM Coverage in Washington

Washington State only requires drivers to carry minimum liability insurance of $25,000 per person and $50,000 per accident. These minimal limits are often catastrophically inadequate in serious collisions. The cost of an ambulance ride, emergency room visit, diagnostic imaging, and even minor follow-up care can easily exceed $25,000. For fractures, surgeries, or long-term rehabilitation, the costs can soar into the hundreds of thousands of dollars.

Relying on the other driver to have adequate insurance is a significant gamble. Carrying robust UIM coverage is the most effective way to ensure you and your passengers have access to sufficient compensation after a crash caused by someone else’s negligence. A Seattle car accident lawyer will consistently advise clients to carry UIM limits equal to their bodily injury liability limits—often $100,000, $250,000, or even $500,000. The premium increase for higher UIM limits is typically marginal compared to the profound financial protection it provides.

Critical Legal Nuances and Potential Pitfalls

Several unique aspects of Washington UIM law can drastically impact your claim.

• Stacking of Policies: “Stacking” refers to the ability to combine UIM coverage from multiple vehicles on one policy or from multiple applicable policies. If you have two cars on your policy with $100,000/$300,000 UIM limits, anti-stacking language in your policy may limit your total recovery to the per-person limit for one vehicle ($100,000). However, some policies may allow for stacking. A knowledgeable attorney will meticulously review your policy and all other potentially applicable policies (e.g., from household relatives) to maximize your available coverage.

• Set-Offs and Reductions: Your UIM policy will specify how your recovery is calculated. The standard language dictates that your UIM recovery is the lesser of: a) your uncompensated damages, or b) your UIM limit minus the amount recovered from the at-fault driver. For example, with $100,000 in damages, a $25,000 recovery from the at-fault driver, and $100,000 in UIM coverage, your UIM recovery would be $75,000.

• The “Made Whole” Doctrine: Washington courts generally adhere to the “made whole” doctrine, which holds that an insurance company cannot enforce its subrogation rights (right to be reimbursed) until the injured insured has been fully compensated for their losses. This doctrine can be crucial in disputes involving health insurance liens.

• Policy Deadlines and Notice Requirements: Auto insurance policies are contracts filled with strict deadlines and notice requirements. Failing to notify your UIM carrier of a potential claim in a timely manner, or missing other critical deadlines, can be used as grounds to deny your claim. An attorney ensures all contractual and legal obligations are met to protect your right to recover.

• Uninsured (UIM) vs. Underinsured (UIM) Coverage: It is vital to distinguish UIM from Uninsured Motorist (UM) coverage. UM applies when the at-fault driver has no insurance whatsoever. UIM applies when they have some insurance, but not enough. Both are equally important and are typically offered together.

The Role of a Washington Lawyer in a UIM Claim

The inherent conflict of interest in a UIM claim—where you are making a significant injury claim against your own insurer—makes legal representation not just beneficial, but essential.

• Managing the Dual Role of the Insurer: Your lawyer acts as a buffer between you and your insurance company. They handle all communications to prevent you from making statements that could be misconstrued and used to devalue your claim. They understand the tactics insurers use to minimize payouts and are prepared to counter them.

• Valuing the Total Claim: Accurately valuing a personal injury claim requires experience. An attorney will assemble a comprehensive demand that accounts for all economic damages (medical expenses, lost wages, future medical care, loss of earning capacity) and non-economic damages (pain and suffering, emotional distress, loss of enjoyment of life). They often work with medical experts, economists, and life care planners to build a compelling case for maximum compensation.

• Navigating Arbitration: If your claim proceeds to arbitration, your lawyer will be responsible for all aspects of this formal legal proceeding. This includes drafting the arbitration demand, conducting discovery, subpoenaing evidence and witnesses, preparing persuasive legal briefs, and presenting a powerful case at the arbitration hearing.

• Protecting Against Bad Faith: Insurance companies have a legal duty to act in good faith toward their policyholders. If an insurer unreasonably delays, denies, or undervalues a valid UIM claim, they may be acting in “bad faith.” A lawyer can identify bad faith tactics and pursue not only the owed UIM benefits but also additional damages and attorney fees allowed under Washington’s Insurance Fair Conduct Act (IFCA) and the Consumer Protection Act (CPA).

Choosing the Right UIM Coverage: A Practical Guide

When reviewing your policy or shopping for new insurance, do not simply accept the default options.

1. Match or Exceed Your Liability Limits: Your UIM limits should ideally match the bodily injury liability limits you carry. If you have $500,000 in liability coverage to protect others, you should have at least $500,000 in UIM coverage to protect yourself and your family.

2. Understand Your Policy’s Definitions: Review the definitions section of your policy for “underinsured motor vehicle.” Some policies contain exclusions that may bar coverage for accidents involving certain vehicles, like those owned by the insured or a family member.

3. Reject “Stacking” Waivers Carefully: If your insurer offers a premium discount to waive your right to stack coverages, consider the long-term implications. The small savings may not be worth the significant reduction in available coverage after a serious accident.

4. Consult an Attorney for Review: A brief consultation with a Washington car accident lawyer to review your existing insurance declarations page can provide invaluable peace of mind and ensure you are adequately protected before an accident ever happens.