Uninsured & Underinsured Motorist Coverage in Michigan

Despite Michigan law requiring all drivers to carry auto insurance, an estimated 20-25% of Michigan motorists drive without any coverage at all. Even among those who are insured, many carry only the state minimum liability limits, which may be insufficient to fully compensate you for serious injuries. Uninsured motorist (UM) and underinsured motorist (UIM) coverage exists to protect you when the at-fault driver cannot. Understanding how these coverages work in Michigan's unique no-fault system is essential for every driver.

What Is Uninsured Motorist (UM) Coverage?

Uninsured motorist coverage pays you when you are injured by a driver who has no liability insurance at all. It steps into the shoes of the at-fault driver's insurer and compensates you for non-economic damages (pain and suffering) that you would have recovered through a third-party claim if the other driver had been properly insured.

UM coverage typically applies in the following situations:

• The at-fault driver has no insurance: They let their policy lapse, never purchased one, or their insurer became insolvent
• Hit-and-run accidents: When the at-fault driver flees the scene and cannot be identified, UM coverage treats the situation as an uninsured motorist claim (subject to specific policy requirements, such as physical contact with the phantom vehicle or a police report)
• Stolen vehicles: When a thief causes an accident, the vehicle owner's insurance typically does not cover the thief's liability

What Is Underinsured Motorist (UIM) Coverage?

Underinsured motorist coverage kicks in when the at-fault driver has liability insurance, but their policy limits are not enough to cover your full damages. For example, if the at-fault driver carries only $250,000 in bodily injury liability and your damages are $500,000, UIM coverage can pay the difference up to your own UIM policy limits.

UIM coverage is particularly valuable in Michigan because many drivers carry only the state-mandated minimums. Even with Michigan's relatively high minimum liability requirements ($250,000/$500,000 as of the 2019 reform), a single catastrophic injury can easily exceed these limits.

Is UM/UIM Coverage Required in Michigan?

No. Unlike some states that mandate uninsured/underinsured motorist coverage, Michigan does not require drivers to carry UM or UIM. However, Michigan insurers are required to offer it to you when you purchase a policy. If you decline the coverage, you must do so in writing.

Despite being optional, UM/UIM coverage is one of the most important protections you can add to your Michigan auto insurance policy. Given the high rate of uninsured driving in the state and the potential for damages to exceed liability limits, this coverage can mean the difference between full compensation and financial devastation after a serious accident.

How UM/UIM Works with Michigan No-Fault

Understanding how UM/UIM interacts with Michigan's no-fault system requires distinguishing between different types of benefits:

• PIP benefits cover your medical expenses, lost wages, and household services regardless of fault. These come from your own insurer. UM/UIM does not replace or supplement PIP. For details on PIP, see our PIP benefits guide.
• Third-party (tort) damages cover pain and suffering, which you can only recover by proving the other driver was at fault and that you meet the serious impairment threshold. UM/UIM steps in here when the at-fault driver is uninsured or underinsured.

In other words, UM/UIM is not a substitute for PIP. It is a substitute for the at-fault driver's liability coverage. You must still meet the serious impairment threshold to collect UM/UIM benefits for non-economic damages, just as you would for any third-party claim.

Default Coverage vs. Purchased Coverage

Michigan law does not provide any default UM/UIM coverage. If you did not affirmatively purchase it or if your agent did not include it in your policy, you do not have it. Some key points:

• Insurers must offer UM/UIM coverage but are not required to include it automatically
• You can select different limits for UM and UIM, though many policies combine them
• Coverage limits typically range from $100,000/$300,000 up to $1,000,000 or more
• Higher limits cost relatively little compared to other coverages, often just $50-$150 more per year for significantly more protection

Review your declarations page (the summary of your coverages) to confirm whether you have UM/UIM and at what limits. If you are unsure, call your agent or insurer and ask specifically.

Stacking UM/UIM Coverage

"Stacking" refers to combining the UM/UIM limits from multiple vehicles on your policy or from multiple policies in your household. Michigan law generally permits stacking unless your policy contains an explicit anti-stacking provision.

Here is how stacking works: Suppose you have two vehicles on your policy, each with $250,000 in UM coverage. If stacking is permitted under your policy, you may be able to combine them for a total of $500,000 in available UM coverage for a single claim.

However, most Michigan insurers include anti-stacking language in their policies, limiting your recovery to the single highest applicable limit regardless of how many vehicles are insured. Whether an anti-stacking clause in your specific policy is enforceable depends on its precise language and applicable case law. An attorney experienced in insurance coverage disputes can evaluate whether stacking is available in your situation.

Arbitration Clauses

Many Michigan UM/UIM policies contain mandatory arbitration clauses. This means that if you file a UM/UIM claim and dispute the amount your insurer offers, the disagreement is resolved through binding arbitration rather than a jury trial. Key features of UM/UIM arbitration:

• Binding vs. non-binding: Most policies specify binding arbitration, meaning the arbitrator's decision is final and cannot be appealed except in very limited circumstances (fraud, arbitrator misconduct, etc.)
• Arbitrator selection: Policies typically provide that each side selects one arbitrator, and those two select a neutral third arbitrator
• Streamlined process: Arbitration is generally faster and less formal than a court trial, but you lose the right to a jury of your peers
• Discovery limitations: The discovery process in arbitration may be more limited than in court litigation
• Enforceability: Michigan courts have generally upheld mandatory arbitration clauses in UM/UIM policies as enforceable

Whether arbitration helps or hurts your case depends on the specific facts. Some attorneys prefer arbitration for clear-liability cases because it is faster. Others prefer a jury trial for high-value cases where emotional testimony may yield higher awards.

When UM/UIM Coverage Pays Out

To trigger your UM/UIM coverage, several conditions must typically be met:

1. The other driver must be at fault: You must demonstrate that the uninsured or underinsured driver caused the accident through negligence
2. You must meet the serious impairment threshold: Just like a regular third-party claim, you must show a serious impairment of body function under MCL 500.3135
3. The other driver must be actually uninsured or underinsured: For UIM claims, this means the at-fault driver's liability limits are less than your total damages. Some policies define "underinsured" as having limits lower than your UIM limits
4. You must comply with policy requirements: This includes timely notice to your insurer, cooperation with their investigation, and in hit-and-run cases, filing a police report within the required timeframe

Common UM/UIM Disputes

Even when you have UM/UIM coverage, collecting on it is not always straightforward. Common disputes include:

• Whether the threshold is met: Your own insurer may argue you do not have a serious impairment, just as the other driver's insurer would
• The value of damages: Insurers routinely undervalue pain and suffering claims, offering far less than what a jury might award
• Whether the other driver is truly "underinsured": Policy language varies on how this is determined
• Consent-to-settle requirements: Many UIM policies require you to get your insurer's permission before accepting the at-fault driver's liability limits. Settling without consent can void your UIM coverage
• Exhaustion requirements: Some policies require you to exhaust the at-fault driver's liability limits before the UIM coverage triggers

Protecting Yourself: How Much UM/UIM to Carry

We recommend carrying UM/UIM limits that match your bodily injury liability limits, and ideally as high as you can reasonably afford. Given that the 2019 insurance reform reduced PIP benefits for many drivers, robust UM/UIM coverage is more important than ever as a financial safety net.

Consider this: UM/UIM coverage protects your family as well. If your spouse or children are injured by an uninsured driver, your UM coverage extends to them as household members. The relatively modest cost of this coverage provides protection that is disproportionately valuable when you need it most.

If you have been injured by an uninsured or underinsured driver, do not assume your insurer will simply pay your claim in full. A personal injury attorney experienced in UM/UIM claims can ensure you receive the full value of your coverage rather than accepting an inadequate settlement.