And while “insurance coverage” might not be the two most exciting words you’ll ever hear together in a sentence, it’s important to pay attention right now. Starting July 1, 2023, we’ll see a big, long-overdue change with the way Virginia enforces your underinsurance (UIM) policy. And, you’ll be getting a letter in the mail soon, if you haven’t already.
UIM is an add-on to your auto insurance policy. It helps you if another driver crashes into you, and the other driver is uninsured or just doesn’t have enough insurance to cover all your losses. For a small amount, you can get up to $250,000 worth of UIM coverage.
Don’t ignore the letter you get from your insurance company
Your insurance company is sending you a letter letting you know of the law change. While UIM coverage is very inexpensive for the amount of coverage you get (many pay less than $100 for an entire year), there will be a slight increase to keep it the same. They will ask if you want to reduce your UIM coverage in order to lower your premium. Don’t do it!
Why should I keep my UIM insurance in Virginia?
If you or a loved one is in a serious car accident, you want to be able to recover all your losses. Prior to July 1, 2023, there was a “UIM offset.” This meant that the amount of UIM coverage you had was reduced (offset) by the amount you received from the at-fault driver. After July 1, this offset is going away.
Let’s crunch some numbers in an example to help explain the difference before and after the law change:
| Prior to 7/1/23 | After 7/1/23 | |
| Your losses in an accident | $350,000 | $350,000 |
| Other driver’s insurance | -$100,000 | -$100,000 |
| What you still need | $250,000 | $250,000 |
| Your UIM coverage limit | $250,000 | $250,000 |
| UIM offset | -$100,000 | $0 |
| What you get from UIM | $150,000 | $250,000 |
| Other driver’s insurance | $100,000 | $100,000 |
| From UIM | $150,000 | $250,000 |
| Total you can recover | $250,000 | $350,000 |
| Your total losses | $350,000 | $350,000 |
| Compensation recovered | $250,000 | $350,000 |
| Shortfall | $100,000 | $0 |
Why is my UIM policy so important?
Don’t reduce your UIM coverage. If you want more proof, let’s look at two statistics:
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- While Virginia has fewer uninsured drivers than most states, in 2021 just over 1 in 10 drivers were still uninsured. This is according to a study by the Insurance Information Institute.
- The amount of insurance drivers must carry is minimal considering the costs associated with car accidents. Through 2024, drivers need a minimum of $30,000 in personal injury liability coverage for one person, and $60,000 if two or more people are injured or die. In 2025, those numbers rise to $50,000 and $100,000. However, many crashes average about $200,000 in losses, according to the National Safety Council. Motor vehicle accidents that cause disabling injuries cost an average over $1 million, and fatal accidents over $12 million.
When the letter comes and offers you a chance to reduce your uninsured/underinsured coverage, don’t take it. If you want to lower your premium, you can try shopping around for a better company. The change to UIM coverage is good for drivers in Virginia. It’s good for you.