Uninsured/Underinsured Motorist Coverage (UM/UIM)

What Is Uninsured/underinsured Motorist Coverage?

Uninsured motorist coverage (UM) is a part of your own auto policy that pays what the at-fault driver’s liability insurer would have paid if that driver had insurance. It applies when the other driver has no policy at all and, subject to the policy’s reporting conditions, when the driver cannot be identified after a hit-and-run. Underinsured motorist coverage (UIM) applies when the at-fault driver has insurance but the limits are lower than your damages. In both cases you make the claim against your own insurer, which then takes on the role the at-fault driver’s insurer would have played.

That role includes the defenses. A UM or UIM insurer pays only what you are “legally entitled to recover” from the at-fault driver, so it can argue that the other driver was not negligent, that your injuries are unrelated, and, in North Carolina, that you were contributorily negligent. Buying the coverage does not remove the need to prove the case; it only guarantees there is a solvent insurer to prove it against.

How Do UM And UIM Work In North Carolina?

N.C. Gen. Stat. § 20-279.21 sets the rules. Every North Carolina auto liability policy must carry uninsured motorist bodily injury coverage, and its limits must equal the highest bodily injury liability limits on the policy unless the named insured chooses different limits, which may not fall below the required minimums of $50,000 per person and $100,000 per accident. Underinsured motorist coverage is required as well, with limits equal to the UM limits purchased. Insurers must offer limits up to $1,000,000 per person and $1,000,000 per accident but are not required to sell more. The North Carolina Department of Insurance confirms that underinsured motorist coverage is included in all policies new or renewed on or after July 1, 2025, alongside the higher 50/100/50 minimum liability limits.

The July 2025 change also altered the UIM math. Under the current statute, UIM applies once every liability policy covering the underinsured vehicle has been exhausted by payment or tender of its limits, and the coverage then “applies to the first dollar” beyond what the liability policy paid, up to your UIM limit. Older policies compared limits to limits and paid only the difference, so your policy’s effective date matters. UIM limits for different vehicles on one policy cannot be added together, but a person insured under more than one policy may combine the highest applicable limit under each policy.

What Does A UIM Claim Look Like In A North Carolina Crash?

An illustrative example: a nurse driving home from a shift in Fayetteville is hit head-on by a driver who crossed the center line. Her damages, counting surgery, lost wages, and pain and suffering, are reasonably valued at $200,000. The at-fault driver carries North Carolina’s minimum $50,000 per person bodily injury limit. Her own policy, renewed in August 2025, carries $100,000 per person in UM/UIM coverage. The at-fault driver’s insurer tenders its full $50,000 limit, which exhausts that policy. Her UIM coverage then applies to the first dollar beyond that $50,000, so it can pay up to its $100,000 limit, bringing her total recovery to $150,000. Under the older limits-to-limits method the UIM payment would have been capped at $50,000 (the $100,000 UIM limit minus the $50,000 already paid), which is why the policy’s effective date matters.

Change the facts so the at-fault driver fled and was never found. Now it is a UM claim against her own insurer for her damages up to the $100,000 UM limit, provided she reported the hit-and-run as her policy requires. All figures are hypothetical.

Why Does UM/UIM Matter For A North Carolina Injury Claim?

Because it is often the only meaningful source of recovery. A driver with no insurance rarely has assets worth pursuing, and a driver with minimum limits cannot personally pay the difference between $50,000 and a serious-injury verdict. UM and UIM turn a judgment-proof defendant into a collectible claim, and the size of your own limits, not the other driver’s, sets the ceiling on what you can realistically recover.

The coverage also changes who your opponent is. Your own insurer stands in the at-fault driver’s shoes and can raise every defense the at-fault driver could, including North Carolina’s contributory negligence rule, under which any negligence by you that helped cause the crash bars recovery entirely. A recorded statement to your own company deserves the same care as one given to the other side. One difference favors you: because a UM/UIM claim is a first-party claim, North Carolina’s unfair claim settlement practices statute, N.C. Gen. Stat. § 58-63-15(11), governs how your insurer handles it, including its duty to attempt in good faith to settle promptly and fairly once liability is reasonably clear. Learn more on our North Carolina car accident lawyer page.

How Do You Make A UM Or UIM Claim In North Carolina?

The process runs in a set order. First, notify your own insurer of the crash and of any sign that the other driver is uninsured or underinsured; policies typically require prompt notice and, for hit-and-run claims, a police report. Second, pursue the at-fault driver’s liability coverage to its limit, because the statute conditions UIM on that policy being exhausted by payment or tender of its limits. Third, before accepting the liability limits or signing any release, give your UIM insurer the notice that policies typically require so it can protect its own rights against the at-fault driver; settling without it can jeopardize the UIM claim. Fourth, present the UIM claim with the proof you would put before a jury, including fault evidence that answers the contributory negligence defense before it is raised.

• Report promptly to your own insurer, and file a police report for any hit-and-run.
• Exhaust the liability policy by payment or tender of its limits before the UIM claim matures.
• Notify the UIM carrier before you release the at-fault driver.
• Check the effective date of your policy, because it decides whether the first-dollar or the difference calculation applies.