How Do Car Insurance Companies Handle Uninsured Motorist Claims

How do car insurance companies handle claims when one of their clients are struck by a driver who doesn’t have car insurance? Most people never think about this, but I see it several times a year as the Dallas / Fort Worth area has historically had the highest percentage of drivers without car insurance, or uninsured motorists, in Texas. The only time most people think about this after they’ve been hit by an uninsured driver.

Let’s first refresh one of the optional coverage items your Texas car insurance policy may, or may not have – uninsured and under insured motorist coverage. UM / UIM coverage provides protection from drivers who have no car insurance, as well as those with not enough coverage. If the person who hits you doesn’t have insurance, this coverage pays to repair or total your car based on your policy’s limits, or amount of coverage.

It also pays when the person who hits you doesn’t have enough car insurance coverage to fully pay for repairs or the totaled value of your vehicle. For instance, if you drive a $50,000 pickup or luxury import, and the person who hits you has only state minimum limits (see, UIM coverage will pick up the difference between where their policy stops and the cost to repair or the totaled value of your vehicle.

UM/UIM also provides two types of coverage, property damage and bodily injury. The property damage portion is what’s used to repair or pay for the totaled value of your car. One of the benefits of having this coverage is it limits the property damage deductible to $250 maximum. The bodily injury coverage helps defray the cost of medical care for you and anyone riding in the car with you. Considering the cost of medical care, as well as the deductibles some people carry, the cost of this coverage is a bargain.

To illustrate the process some car insurance companies go through when addressing an uninsured motorist claim, let’s take a look at what happened to a client of mine. She was struck last fall by a driver in a minor fender bender. The driver who hit her car did not have car insurance. They did have an insurance card but the policy had been cancelled for non-payment. Like many uninsured drivers, they made the initial payment to secure the ID card then made no further payments on the policy and were driving without insurance.

Since the other driver didn’t have car insurance, I advised my client file the claim on her policy. She’d have to pay the uninsured motorist property damage deductible but this would be refunded back to her if her company recovered the money from the other driver. If my client had chosen to not carry UM / UIM property damage coverage, then she’d have to pay the property damage deductible on her liability coverage.

The car insurance company turns uninsured motorist claims over to their subrogation department. Several attempts are made by this department to make payment arrangements with the uninsured driver to pay for the damages over time. If the insurance company is unable to obtain a commitment to make payments, some companies will then turn the uninsured driver over to a collections agency to obtain payments for the repairs instead of writing off the unpaid claim. If the collection agency is unable to obtain payments, they may then move to have the uninsured driver’s license suspended to help encourage them to make those payments.

This process is slow, cumbersome, and offers no guarantee money will ever be recovered by the insurance company. This keeps premiums higher than they should be for everyone who does have car insurance. It also means most of us should carry uninsured motorist protection on our policies to protect against being hit and potentially hurt by someone with no car insurance. What do you think? Share your questions, comments, and experiences with me on my Google +, Facebook, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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