Understanding Uninsured and Underinsured Motorist Coverage in Alabama

Most drivers think about car insurance in terms of what the law says they must have, and they often look for the least expensive way to meet that obligation. In Alabama, that means having liability coverage to pay for injuries or damage you cause to others in a car accident. But one of the most important kinds of protection you can have for yourself and your family is something many people overlook: uninsured and underinsured motorist coverage, commonly called UM and UIM.

These coverages step in when the person who hits you either has no insurance at all or doesn’t have enough insurance to cover the damage they caused. In this article, I’ll explain why UM and UIM insurance are so important, how they work under Alabama law, and what to expect if you ever have to make a claim.

Alabama’s Minimum Liability Requirements

Every driver in Alabama is required by law to carry a minimum level of liability insurance. That coverage pays for injuries or damage that you cause to others if you are at fault in a wreck. The law currently requires a minimum of $25,000 per person and $50,000 per accident for bodily injury or death.

While those minimums meet the legal standard, they are often not enough to cover the real cost of a serious injury. A single hospital stay, surgery, or course of therapy can exceed those limits quickly. If you are injured by someone who carries only the minimum or no insurance at all, you could be left responsible for medical bills, lost income, and other damages that far exceed what their policy pays.

Why UM and UIM Coverage Exist

Recognizing this risk, the Alabama Legislature created the Uninsured Motorist Act. The purpose is to make sure that drivers who buy insurance for themselves can have the same protection against injury caused by an uninsured or underinsured driver as they would have if that driver had carried proper insurance.

UM and UIM coverage are included in every automobile liability policy issued in Alabama unless the named insured rejects them in writing. That means most people have this protection unless they signed a document saying they do not want it. The rejection must be clear and signed by all named insureds on the policy. If more than one person is listed as a named insured, one person’s rejection does not automatically cancel coverage for the others.

Underinsured motorist coverage, or UIM, was added to the statute in 1985 and is now considered part of the same overall protection. Given that the law requires minimum coverage, most people are now mainly looking to recover for underinsured motorist coverage, as legally there should be no completely uninsured motorists. Together, these coverages make sure that when the at-fault driver’s policy is missing or insufficient, your own insurer fills the gap up to the limits you purchased.

What UM/UIM Coverage Actually Does

UM and UIM coverage have a special role because they blend features of both first-party and third-party insurance. They are first-party in the sense that you are making a claim under your own policy, but they also depend on proving that someone else was at fault. To recover under UM or UIM coverage, you must show three things:

1. That the other driver was legally at fault for the accident.
2. That you suffered damages such as injury, medical expenses, or lost wages.
3. That the other driver had no insurance, or not enough insurance, to pay those damages.

Once you establish those facts, your insurance company steps in to pay the damages you are legally entitled to recover from the at-fault driver, up to your policy limits.

Medical expenses are part of what you can recover if those expenses are reasonable and necessary and if you have actually paid or are obligated to pay them. Alabama law allows recovery of both compensatory and punitive damages under UM/UIM coverage. This includes lost income and pain and suffering damages.

How UM/UIM Coverage Works in Practice and How to Check Your Own Policy

Many drivers don’t realize how crucial UM and UIM coverage are until it’s too late. Here’s a common situation:

You are driving home from work when another driver runs a red light and hits you. You break her leg, your car is totaled, and you’re out of work for months. The driver who caused the wreck has only Alabama’s minimum liability coverage of $25,000, or sometimes the other driver has no insurance at all. Your hospital bills alone come to more than $40,000. Without UM/UIM coverage, you would be responsible for everything beyond the other driver’s limit.

However, if your own policy has $100,000 in underinsured motorist coverage, your own insurance company pays the difference, covering not only the remainder of your medical expenses but also your lost wages and pain and suffering. UM/UIM insurance has taken the situation from a total and devastating loss to being made whole.

The lesson is simple: UM and UIM coverage protect you when the other driver can’t. They’re designed to make sure you don’t pay the price for someone else’s lack of responsibility.

Some drivers think they don’t need uninsured or underinsured motorist coverage because they already have health insurance, but that’s a costly misunderstanding. Health insurance only pays for medical treatment. It doesn’t cover lost wages, pain and suffering, permanent injury, or the impact an accident can have on your future. Health insurers can also demand reimbursement if you later recover money from another source, which reduces what you actually take home. UM and UIM coverage, on the other hand, compensate you for the full range of losses caused by an uninsured or underinsured driver, including those non-medical damages. In many cases, this is the only way to be made whole after a serious wreck.

To find out what coverage you have, look at your policy’s declarations page. This is the summary page that lists each type of coverage and its dollar limits. You should see entries labeled “Uninsured Motorist” or “Underinsured Motorist.” Sometimes these are split between “Property Damage” and “Bodily Injury.” Make sure to check both, but bodily injury UM/UIM is particularly important in the above situation. If those limits match your “Liability” insurance and you have limits higher than the state minimum of $25,000/$50,000, you’re likely well protected. If they’re lower, or if the coverage isn’t listed at all, contact your insurance agent or company and ask for written confirmation of your UM and UIM coverage amounts.

Increasing these limits is usually inexpensive compared to the protection they provide. For only a small increase in your premium, you can add tens of thousands of dollars in coverage that could make a life-changing difference if you’re ever involved in a serious accident.

Stacking Coverage and Understanding Limits

One of the most beneficial features of Alabama’s UM/UIM law is the ability to stack coverage. Stacking means you can combine more than one UM or UIM limit to increase the amount available for your claim.

If you have one policy that covers multiple vehicles, you can stack coverage for up to three vehicles under that policy. In other words, you can combine the primary coverage on the vehicle involved in the wreck with up to two additional coverages. If you have multiple policies on separate vehicles, Alabama law allows you to stack all of those coverages without limit.

There are some exceptions. If you are considered an insured only because you were occupying the vehicle involved in the accident—for example, if you were a passenger or a permissive driver rather than a named insured or resident family member—you generally cannot stack coverage from other vehicles or policies.

The coverage on the vehicle involved in the accident is considered your primary coverage. Any other UM or UIM policies you have act as excess coverage, which applies only after the primary limits are exhausted.

How the UM/UIM Claim Process Works

Filing and pursuing a UM or UIM claim in Alabama is not the same as filing a simple car insurance claim. These claims involve both contract law and tort law principles, and there are strict procedures that must be followed to preserve your rights.

You may choose to file suit against the at-fault driver, your UM/UIM insurer, or both. If you sue only the at-fault driver but give proper notice to your UM/UIM carrier, the insurer will be bound by any judgment you obtain against that driver. In uninsured motorist cases, insurers sometimes choose to defend the case directly, but in underinsured motorist cases they typically opt out and remain bound by the outcome.

Most UM/UIM policies include a “consent to settle” clause. This means you must obtain your insurer’s permission before settling with the at-fault driver’s insurance company. Failing to do so could cause you to lose your right to UM/UIM benefits. The reason for this rule is to protect the insurer’s right to seek repayment from the at-fault driver after paying your claim, which is known as subrogation.

When a settlement is reached with the at-fault driver, the Alabama Supreme Court’s decision in Lambert v. State Farm established a specific process to protect everyone’s rights. This process, often referred to as the Lambert procedure, involves several steps:

1. As soon as you or your attorney realize that your damages may exceed the at-fault driver’s insurance limits, you should notify your own insurer of your intent to seek UIM benefits.
2. Before finalizing a settlement with the at-fault driver, you must inform your insurer of the proposed settlement terms.
3. If your insurer wants to preserve its right to pursue the at-fault driver later, it must, within a reasonable time (typically about 30 days), advance you the same amount as the proposed settlement before the other driver is released.
4. If the insurer refuses to consent, denies your claim without a good faith investigation, or delays unreasonably, it waives its right of subrogation.

Because these steps involve strict timing and legal notice requirements, having a lawyer experienced in UM/UIM claims can prevent serious mistakes that could cost you your coverage.

Credits, Offsets, and Other Limitations

UIM coverage is designed to make up the difference between the damages you actually suffered and the amount available under the at-fault driver’s policy. Your insurer is entitled to credit for the liability limits that were available to you. For example, if the other driver’s liability policy was $25,000 but multiple injured people had to split that amount and your share was only $7,500, your insurer receives a credit for $7,500 and must pay the rest up to your UIM limit.

Insurers sometimes include offsets for other coverages such as medical payments, but those offsets cannot reduce your total UM/UIM benefits below the $25,000 statutory minimum. Additionally, the liability coverage of a non-motorist joint tortfeasor (such as a contractor who negligently maintained a roadway) generally cannot be used as a credit to reduce what your UM/UIM carrier owes.

Defenses and Invalid Policy Restrictions

When defending a UM/UIM claim, the insurance company can use any defenses that would have been available to the at-fault driver, such as contributory negligence. However, certain policy provisions that restrict coverage more than the Alabama UM/UIM statute allows are unenforceable.

For example, policy terms requiring physical contact in a “hit-and-run” accident are void. You can still recover if another vehicle caused your crash without making contact, as long as you can prove that driver was at fault. Similarly, provisions that demand corroborating evidence beyond your own testimony in a “phantom driver” case are invalid. Policies that require you to actually collect the at-fault driver’s liability limits before accessing your UIM benefits are also void under Alabama law.

Notice Requirements and Reasonableness

Timely notice to your insurer is important, but the rules for UM/UIM claims are more flexible than for regular liability claims. In a UM/UIM case, courts look at whether any delay in giving notice actually harmed or prejudiced the insurer. The length of the delay and the reason for it are both factors the court will consider. If the insurer cannot show that it was prejudiced, the delay may not bar your recovery.

Why These Claims Are So Complex

UM and UIM claims combine elements of contract law, tort law, and statutory law. They involve questions about fault, damages, coverage limits, notice requirements, subrogation rights, and sometimes stacking across multiple vehicles or policies. These cases can also become more complicated if the accident happens outside Alabama, since the law that applies is usually the law of the state where the insurance contract was made.

Because of these complexities, many people find themselves facing unexpected challenges even when they thought they were fully insured. Having a lawyer who understands Alabama’s UM/UIM laws can make the difference between receiving partial compensation and being made whole.

Final Thoughts

Uninsured and underinsured motorist coverage is one of the most valuable types of protection you can buy. It is relatively inexpensive, and it ensures that you are not left paying the price for someone else’s lack of responsibility. Take a few minutes to review your policy and make sure you have UM and UIM coverage in place, and that your limits are high enough to protect you and your family. UM/UIM is a fantastic way to control your own recovery for motor vehicle accidents that were caused by someone else’s negligence.

If you are ever injured by a driver who has little or no insurance, talk to a lawyer familiar with Alabama’s UM/UIM laws before you settle or sign any documents. These laws are designed to protect you, but only if you know how to use them. I am always happy to schedule a phone call to discuss UM/UIM policies in Alabama or how you can better protect yourself against the unexpected.