After a car accident, most people assume the at-fault driver’s insurance will pay for the damage and injuries. But in Virginia, many crashes involve drivers who are uninsured or underinsured—and that can leave injured people facing major medical bills and financial stress.
That’s where Uninsured/Underinsured Motorist insurance coverage (UM/UIM) comes in. UM/UIM insurance is coverage on your own auto policy that can help pay when the other driver has no insurance or not enough insurance.
This guide explains UM/UIM coverage in plain English, highlights recent Virginia law changes, and outlines when it may be time to speak with a lawyer.
Quick Definitions: UM vs. UIM
Uninsured Motorist Coverage (UM)
UM coverage may apply if the at-fault driver:
- Has no auto insurance or self-insurance
- Has insurance, but has been denied coverage for any reason (i.e., failing to cooperate with their insurer)
- Is a hit-and-run driver (unknown driver)
- Is immune from liability in certain situations
Underinsured Motorist Coverage (UIM)
UIM coverage may apply if the at-fault driver has insurance, but their limits are too low to cover the full value of your injuries and losses.
Why This Matters in 2026: Virginia’s Minimum Limits Increased
First, as of July 1, 2024, auto insurance became mandatory in Virginia (Virginia Code § 46.2-706). Second, as of January 1, 2025, Virginia’s minimum insurance coverage limits increased to:
- $50,000 bodily injury (per person)
- $100,000 bodily injury (per accident)
- $25,000 property damage
These coverage limits apply to both liability coverage and UM/UIM coverage (liability coverage is the coverage provided through the at-fault driver).
However, even with higher coverage minimums, serious crashes can exceed these numbers quickly—especially when emergency transport, hospitalization, surgery, physical therapy, or time out of work is involved.
A Major Virginia UIM Change: The “Liability Credit” Is No Longer Automatic for Many Policies
For auto insurance policies in effect on or after July 1, 2023, Virginia changed how UIM payments work. This means that almost any accident occurring in 2025 or later is affected by this change.
Under earlier law, the amount you could receive from your UIM coverage was reduced (or offset) by any available liability coverage from the underinsured driver who caused the accident. So, if the driver who hit you had $50,000 in liability coverage and you had $100,000 in UIM coverage, the most you would be able to recover would be $100,000 ($50,000 from the fault driver’s insurance and $50,000 from your UIM insurance).
Now, your auto insurance no longer receives the benefit of that offset/credit unless you specifically elect to give them that benefit (Virginia Code § 38.2-2206). Underinsured motorist coverage is paid without an automatic credit/offset for the at-fault driver’s liability coverage—unless a named insured signs a written election to keep that reduction/offset. So, using the same example from above, assuming you did not sign the election, you would now be able to recover $150,000 in insurance coverage ($50,000 from the fault driver’s insurance and $100,000 from your UIM insurance). The liability and UIM insurance coverages are now added together or “stacked.”
Plain-English takeaways:
You can now receive the full benefit of the UIM coverage on your auto insurance policy (assuming you did not sign the election form). This leads to better coverage for everyone, particularly in cases with severe injuries and high medical bills.
You can take full advantage of the insurance benefits that you are paying for without fear of increased premiums because you are not at fault (Virginia Code § 38.2-1905).
You should NOT let an insurance agent talk you into electing to reduce your UIM limits.
Another Major Change: Your Auto Insurance Must Act in Good Faith When it Comes to Settling Your UM/UIM Claims
Beginning July 1, 2024, your auto insurance company can finally be held accountable for acting in bad faith when negotiating payment of any claims you make under your UM/UIM coverage.
Your insurer acts in bad faith when it:
- Denies or refuses claims without reasonable basis to do so
- Fails to timely pay claims
- Fails to make timely and reasonable settlement offers
- Rejects reasonable settlement demands
- Fails to respond to settlement demands within a reasonable period of time
Under prior law, there was no meaningful penalty for an insurer who acted in bad faith when handling an insured’s UM/UIM claims. This made it far more difficult to negotiate and settle UM/UIM claims because the insurance companies generally faced no consequences for their delay and denial tactics.
This has changed under the newest amendments to Virginia Code § 8.01-66.1. UM/UIM insurers now face the possibility of severe penalties if they are found to have acted in bad faith, including the possibility of having to pay double the amount of any verdict you obtain for your accident (up to $500,000), as well as additional costs, attorneys’ fees and interest.
In short, injury victims needing to use their own UM/UIM coverage are now in a much better position to negotiate with their insurance companies and receive more reasonable and timely settlement offers.
Why UM/UIM Claims Can Still Be Challenging
Even with the recent changes in Virginia law, and although UM/UIM coverage is part of your own auto policy, it can still become complicated because:
- You have to deal with multiple insurance companies and determine when UM/UIM coverage actually comes into play
- Multiple policies might apply (your policy, a household policy, an employer vehicle policy, etc.)
- There are “priority” rules and multiple possible stacking situations
- Insurance companies may disagree about fault or the value of injuries
- You have to take certain steps to “trigger” a potential bad faith claim
When to Speak With a Virginia Car Accident Lawyer
If you suspect the other driver is uninsured/underinsured—or if the injuries are serious—it’s worth getting legal guidance before accepting a settlement.
A Virginia car accident lawyer can help you:
- Identify all available UM/UIM coverage and determine if it applies in your case
- Confirm whether your policy includes an election that reduces UIM benefits
- Take steps to trigger and preserve a potential bad faith claim
- Preserve evidence and avoid paperwork mistakes
- Pursue compensation that reflects long-term medical needs and lost income
FAQ: UM/UIM Coverage in Virginia
What is UM/UIM coverage in Virginia?
UM/UIM coverage is part of your auto insurance policy that can pay for injuries and losses if the at-fault driver has no insurance or not enough insurance.
What are Virginia’s minimum car insurance limits in 2026?
Virginia’s minimum limits are $50,000/$100,000/$25,000.
Can I use UM coverage for a hit-and-run accident?
Yes. Hit-and-run crashes involving an unknown driver are commonly treated as uninsured motorist situations.
Did Virginia change how underinsured motorist coverage works?
Yes. For policies in effect on or after July 1, 2023, the UIM “liability credit” is eliminated unless a named insured signs a written election to keep it. And, for accidents occurring on or after July 1, 2024, UM/UIM insurers must negotiate these claims in good faith or risk significant penalties.
Should I talk to a lawyer before settling a UM/UIM claim?
Often, yes—especially if injuries are serious or coverage is disputed. UM/UIM claims can involve strict procedures and complex insurance questions.
Talk With a Virginia Car Accident Lawyer
UM/UIM coverage can be one of the most important protections you carry—but it only helps if it’s understood and handled correctly after a crash.
If you were injured in a Virginia accident involving an uninsured or underinsured driver, contact Sethi & Sledd to discuss your options and protect your rights.