Underinsured Motorist Coverage in Arizona: A Complete 2024 Guide

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Table of Contents#

1. What Is Underinsured Motorist (UIM) Coverage, Exactly?
2. Arizona State UIM Coverage Requirements
3. How UIM Coverage Works in Arizona: Step-by-Step
4. What Arizona UIM Coverage Covers (and What It Doesn't)
5. UIM vs. Uninsured Motorist (UM) Coverage: Key Differences for AZ Drivers
6. How to File a UIM Claim in Arizona: Step-by-Step Process
7. Common Arizona UIM Claim Pitfalls to Avoid
8. Is UIM Coverage Worth It for Arizona Drivers?
9. FAQs About Arizona UIM Coverage
10. Final Takeaways
11. References

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1. What Is Underinsured Motorist (UIM) Coverage, Exactly?#

UIM coverage is a voluntary auto insurance add-on that pays for damages you sustain in a crash caused by another driver whose liability insurance limits are too low to cover your total costs. Unlike collision coverage, which pays for damages you cause, UIM applies when the at-fault driver's liability limits are insufficient; your payout is reduced by your percentage of fault under Arizona's pure comparative negligence rules.

Arizona offers two types of UIM coverage:

• UIM Bodily Injury (UIM-BI): Covers injury-related costs for you and your passengers
• UIM Property Damage (UIM-PD): Covers damage to your vehicle and personal property in the crash (availability varies by insurer; not all Arizona carriers offer UIM-PD as a separate coverage)

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2. Arizona State UIM Coverage Requirements#

Arizona does not legally require drivers to carry UIM coverage, but state law (Arizona Revised Statutes § 20-259.01) includes a critical mandate for insurers:

All auto insurance providers must offer UIM coverage at limits equal to your selected bodily injury liability limits, unless you explicitly reject the coverage in a signed written waiver.

This means most Arizona drivers have UIM coverage by default unless they actively opted out when purchasing their policy. The minimum liability limits in Arizona are 25/50/15:

• $25,000 bodily injury per person
• $50,000 bodily injury per crash
• $15,000 property damage per crash

These minimums were updated in July 2020 under Senate Bill 1087, increasing from the previous 15/30/10 limits that had been in place for over 40 years.#

3. How UIM Coverage Works in Arizona: Step-by-Step#

UIM follows a clear offset rule in Arizona: the payout you receive from the at-fault driver's insurance is subtracted from your total damages, and your UIM policy covers the remaining gap up to your selected UIM limit.

Real-World Example#

Suppose:

1. An at-fault driver carries Arizona's minimum $25,000 per person bodily injury limit
2. Your total damages from the crash: $82,000 (=$58,000 medical bills + $12,000 lost wages +$12,000 pain and suffering)
3. Your UIM coverage limit: $100,000 per person

The payout process works as follows:

1. The at-fault driver's insurer pays their full $25,000 policy limit
2. Your UIM coverage pays the remaining $57,000 gap ($82,000 - $25,000)
3. You are fully compensated for all your damages with no out-of-pocket costs

Arizona also permits stacking of UIM coverage in many cases: if you have multiple vehicles on your policy, you may be able to combine the UIM limits for all vehicles to cover higher damages. For example, 3 vehicles with $100k UIM limits each could give you access to$300k in total UIM coverage for a single crash. However, stacking depends on your policy language — many modern policies include anti-stacking clauses, so review your policy carefully or consult an attorney to confirm whether stacking applies to your coverage.#

4. What Arizona UIM Coverage Covers (and What It Doesn't)#

Covered Expenses#

Excluded Expenses#

• Damages from crashes where you are entirely at fault (Arizona's pure comparative negligence system allows recovery even if you are partially at fault, but your payout is reduced by your percentage of fault)
• Intentional damage caused by you or another driver
• Normal wear and tear on your vehicle
• Damages that exceed your selected UIM policy limit
• Crashes involving vehicles you own that are not listed on your UIM policy

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5. UIM vs. Uninsured Motorist (UM) Coverage: Key Differences for AZ Drivers#

UIM is often bundled with uninsured motorist (UM) coverage, but they serve distinct purposes:

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6. How to File a UIM Claim in Arizona: Step-by-Step Process#

Arizona has specific notice and timing rules for UIM claims. Under ARS § 12-555, you must provide written notice to your insurer of your intent to pursue a UIM claim within 3 years of the crash date. The underlying personal injury claim against the at-fault driver has a separate 2-year statute of limitations under ARS § 12-542. Follow these steps to file your claim correctly:

1. Gather all evidence at the crash scene: Collect police reports, photos of damage and injuries, the at-fault driver's insurance information, witness contact details, and medical records from all post-crash visits.
2. Notify your insurer promptly: Report the crash to your insurance provider as soon as possible, even if you are not sure you will file a UIM claim. Delayed notice can give the insurer grounds to dispute the claim.
3. File a claim with the at-fault driver's insurer first: Request their full policy limit payout if your damages exceed their coverage. Get written confirmation of their maximum payout offer. Your UIM policy may include a consent-to-settle clause requiring you to notify your UIM carrier before accepting the liability settlement — failure to comply can forfeit your UIM claim.
4. Submit a UIM demand letter to your insurer: Include documentation of all your damages, proof of the at-fault driver's insufficient coverage, and a formal request for the gap amount.
5. Negotiate your payout: If your insurer offers a lowball settlement, provide additional evidence to support your claim, or work with an Arizona auto accident attorney to negotiate on your behalf.
6. Receive your payout: Once a settlement is agreed, your insurer will issue payment for the covered gap amount.

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7. Common Arizona UIM Claim Pitfalls to Avoid#

1. Forgetting you signed a UIM waiver: Many drivers sign UIM waivers without reading their policy paperwork during purchase. Confirm your coverage status before filing a claim.
2. Admitting fault at the crash scene: Arizona's comparative negligence rule reduces your UIM payout by your percentage of fault. Even if you think you may be partially at fault, avoid making statements that could be used against you.
3. Accepting the first settlement offer: Insurance providers often offer 30-50% less than the total value of valid UIM claims initially. Negotiate or get legal support to get full compensation.
4. Missing the statute of limitations: You must provide written notice to your insurer within 3 years of the crash. Missing this deadline can result in losing your right to UIM compensation.
5. Failing to document all damages: Keep every receipt for medical care, car repairs, rental cars, and proof of lost wages to support your claim.
6. Violating the consent-to-settle clause: If your UIM policy requires you to get your insurer's consent before settling with the at-fault driver, failing to do so can void your UIM coverage.

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8. Is UIM Coverage Worth It for Arizona Drivers?#

For the vast majority of Arizona drivers, UIM coverage is well worth the low cost:

• The average UIM premium in Arizona is only $15-$30 extra per month.
• The average cost of a crash-related hospital stay in the U.S. is approximately $57,000, which is more than double Arizona's minimum$25,000 bodily injury liability limit.
• Roughly 1 in 8 Arizona drivers operate without any auto liability insurance, and many more carry only the minimum limits, leaving you at high risk of being stuck with out-of-pocket costs if you are hit by one of these drivers.

UIM is especially valuable if you have significant assets to protect, regularly carry passengers, or commute on high-traffic roads like I-17, I-10, or Loop 101.#

9. FAQs About Arizona UIM Coverage#

Q: Does UIM cover me if I'm hit as a pedestrian or cyclist?#

A: Yes, most Arizona UIM policies extend coverage to you and your family members if you are hit by an underinsured driver while walking, biking, or riding public transit.

Q: How much UIM coverage should I get in Arizona?#

A: Insurance experts recommend matching your UIM limits to your bodily injury liability limits, or selecting at least $100,000 per person /$300,000 per crash for UIM-BI.

Q: Can I use UIM if I'm hit by an underinsured commercial driver?#

A: Yes, the same UIM rules apply to crashes involving delivery trucks, ride-share vehicles, and commercial work trucks.

Q: Does UIM cover hit-and-run accidents in Arizona?#

A: No. Hit-and-run crashes fall under uninsured motorist (UM) coverage, not UIM. If the at-fault driver is never identified, you would file a UM claim. UM and UIM are separate coverages that apply to different situations.#

10. Final Takeaways#

• UIM coverage is offered to all Arizona drivers by default, and you must sign a written waiver to opt out.
• It covers the gap between the at-fault driver's liability limits and your total crash-related damages.
• Arizona permits stacking of UIM limits across multiple vehicles on the same policy, subject to your policy's terms.
• You must provide written notice of a UIM claim to your insurer within 3 years of the crash date under ARS § 12-555.
• For most drivers, UIM is an affordable, high-value protection that prevents thousands of dollars in out-of-pocket costs after a crash.

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References#

1. Arizona Department of Insurance and Financial Institutions (AZDIFI). Automobile Insurance Consumer Information. https://difi.az.gov/consumer/automobile-insurance
2. Arizona Revised Statutes § 20-259.01. Motor Vehicle Liability Policy; Uninsured and Underinsured Motorist Coverage. https://www.azleg.gov/ars/20/00259-01.htm
3. Arizona Revised Statutes § 12-555. Uninsured and Underinsured Motorist Coverage; Claims; Time Limits. https://www.azleg.gov/ars/12/00555.htm
4. Insurance Research Council (IRC). Uninsured Motorists, 2025 Edition.
5. State Farm. (2020). Understanding Arizona's New Auto Liability Coverage Law. https://newsroom.statefarm.com/new-arizona-auto-liability-coverage-law/