Underinsured motorist (UIM) claims can be an important source of financial recovery after a serious car crash or other motor vehicle accident. We deal with UIM claims each time we represent someone in a personal injury case who has been hurt in a motor vehicle crash when they: 

1. have injuries, damages and losses exceeding the limit of the at-fault driver’s insurance; and
2. have their own auto policy with UIM coverage.

If the UIM carrier handles the UIM claim in a way that is contrary to the obligated standard of care, they can also become an insurance bad faith claim. 

However, these claims involve strict policy requirements and legal deadlines. Failing to follow those requirements can jeopardize your ability to recover benefits. Below are five common mistakes that can derail a UIM claim, if you have UIM coverage.

1. Waiting Too Long to Open the UIM Claim

When claiming after an accident, many people focus only on the claim against the at-fault driver and delay notifying their own insurer. That can be a problem. Some insurance policies require notice of a UIM claim “as soon as practicable.” If notice is delayed and the insurer can show it was prejudiced by that delay, coverage may be affected. A good rule of thumb is to open the UIM claim as soon as it becomes clear that damages may exceed the liability limits.

2.  Missing the Statute of Limitations

Colorado law provides a specific statute of limitations for UIM claims. Generally, the deadline is:

• Three years from the date of the crash, or
• Two years from the date you receive payment of the liability settlement or judgment, whichever occurs later.

Failing to settle a UIM claim or file suit against the UIM insurer prior to the expiration of the statute of limitations bars the claim. It is very important to monitor these time limits carefully.

3. Settling With the At-Fault Driver Without Notice to the UIM Carrier

Most UIM policies contain consent-to-settle clauses requiring the insured to notify the UIM carrier before settling with the at-fault driver. These provisions exist because the UIM insurer may have subrogation rights against the responsible driver. Subrogation is the process where one party assumes the legal rights of another. If an insured settles without notifying the UIM carrier, courts may presume the insurer was prejudiced, potentially affecting coverage and possibly barring the UIM claim.

4. Failing to Identify All Available Policies

Because UIM coverage follows the person, it may be available through multiple sources.

Potential policies include:

• The injured person’s own auto policy
• Policies issued to household family members
• Umbrella policies
• Policies covering a vehicle the injured person was using
• Employer policies if the injury occurred during work

Investigating all potential policies is critical to maximizing available coverage. People often leave money on the table because they do not perform an adequate coverage investigation.

5. Failing to Give the UIM Insurer the Information It Needs to Evaluate the Claim

Insurance policies typically require the insured to cooperate with the insurer’s investigation.

This may include:

• Providing medical records and bills
• Providing lost wage calculations
• Sitting for an independent medical examination (IME)
• Participating in an examination under oath (EUO)

A failure to cooperate with the UIM carrier, which materially impairs the insurer’s ability to investigate or evaluate the claim, can potentially void coverage and bar the claim. To better understand an insured’s duty to cooperate and when a failure to cooperate defense may be had, see Wenzell v. USAA, 552 P.3d 1121 (Colo. App. 2004) (analyzing C.R.S. § 10-3-1118).

Protecting Your UIM Claim

UIM claims can involve complex interactions between insurance law, contract provisions, and legal strategy. Taking the right steps early in the process can make a significant difference in protecting your rights and maximizing recovery.