UIM coverage refers to underinsured motorist coverage. This is auto insurance coverage that Colorado drivers purchase to protect themselves when the at-fault driver is either uninsured or does not have enough coverage to cover the loss. Colorado motorists have to be thinking ahead on underinsured motorist coverage. You must purchase the coverage before a traffic crash happens.
Underinsured motorist coverage will pick up coverage when the at-fault driver's liability coverage is exhausted.
Example: John is injured in a crash caused by Brett's careless driving. Brett has purchased the state minimum amount of insurance required in Colorado, which is $25,000. Unfortunately, John's injuries required surgery and his medical bills totaled $100,000. The good news is John has $150,000 in underinsured motorist coverage. After Brett's insurance pays for the first $25,000, John's underinsured motorist coverage will kick-in and pay the next $75,000. John will likely receive additional compensation from his underinsured motorist coverage for pain and suffering, impairment and lost wages.
Had John not purchased underinsured motorist coverage, he would have been limited to $25,000 in available coverage under Brett's liability policy. If Brett had no other significant assets, John's total recovery would likely have been limited to $25,000 which doesn't come near the value of his injuries, damages and losses. This example illustrates why it so important that all Colorado drivers purchase underinsured motorist coverage.
The Colorado state legislature requires purchasers of auto insurance to be offered uninsured/underinsured motorist coverage. A driver must take the additional step of rejecting the coverage in writing if they don't want to purchase the coverage. Unfortunately, many Colorado drivers reject this coverage to save a few dollars on their insurance premiums. It is a decision they almost always regret when they end up in wreck with an underinsured driver.