UIM Offset Calculations Illinois: a 8-Point Legal Guide

Last Updated: October 24, 2026

Underinsured-motorist coverage applies when the sum of the bodily-injury liability limits applicable to the driver, the legally responsible person, and the vehicle is less than the underinsured limits. 215 ILCS 5/143a-2(4) states that definition. The most your insurer pays is your UIM limit minus what you actually collected from the other driver’s insurer, and the total from both sources can never exceed your actual damages. Whether medical payments coverage is credited against UIM depends on your policy’s words.

One of the most misunderstood aspects of underinsured motorist coverage is the offset. Many policyholders assume their UIM limits stack on top of the at-fault driver’s liability limits, that if the at-fault driver has $50,000 in coverage and you have $100,000 in UIM, your total available recovery is $150,000. That is wrong. Illinois law (215 ILCS 5/143a-2) sets your insurer’s UIM limit at your UIM limit less the amounts you actually recovered from the at-fault driver’s coverage.

This article is part of our complete guide to UM/UIM claims in Illinois.

The Standard UIM Setoff

Under the statute, your UIM insurer pays at most the difference between your UIM limit and what you actually collected from the at-fault driver’s insurer, not your full UIM limit on top of the at-fault driver’s payment, and never more than your actual damages.

Example: You have $100,000 in UIM coverage. The at-fault driver has $50,000 in liability coverage. If you recover that $50,000, the limit of liability is $50,000, which is the $100,000 limit less the amount recovered. It is not $100,000 on top of the $50,000. The most you can recover from both sources combined is $100,000, not $150,000.

When this matters most: If your UIM limit equals the at-fault driver’s limit, you are not “underinsured” under the statute and UIM does not apply, whatever your losses. If you carry $50,000 UIM and the at-fault driver has $50,000 liability, you get nothing from your own UIM policy even though you paid premiums for that coverage.

Why Higher UIM Limits Matter

This is exactly why we tell clients to carry UIM limits well above the state minimum. A $250,000 or $500,000 UIM policy provides a meaningful recovery even after the setoff. The premium difference between $50,000 and $250,000 in UIM coverage is typically modest, often just $50-100 per year, but the difference in protection is enormous.

Exceptions and Variations

The statute has one exception worth knowing. If the insured and the underinsured-motorist insurer agree, without arbitration, that the injury resulted from the negligent operation, maintenance, or use of an underinsured motor vehicle and agree on the amount of damages, subsection (7) of 215 ILCS 5/143a-2 limits that agreement to the amount by which the underinsured limit exceeds the bodily-injury liability limit of the owner or operator. The agreement is final as to the amount due. It requires compliance with the other policy terms, and before the agreement the insured must have filed suit against the owner or operator and must not have abandoned that suit or settled it without preserving the insurer’s rights under subsection (6). Outside that path, the subtraction is what you actually collected, not the other driver’s limit, so settling for less than the driver’s full limit does not, by itself, end your UIM claim.

Subsection (5) of 215 ILCS 5/143a-2 allows a policy to provide that recovery under more than one policy may equal, and may not exceed, the higher of the applicable limits. The limits of liability are not increased because more than one motor vehicle is covered under the same policy.

Settlement Coordination

Before settling with the at-fault driver’s insurer, give your UIM carrier written notice. Under 215 ILCS 5/143a-2, the carrier then has 30 days to pay you the settlement amount itself and keep its right to pursue the driver. Your policy may also require the carrier’s written consent before you sign a release. Settling without notice can put the UIM claim at risk, so get advice before you accept.

Frequently Asked Questions

Does my UIM coverage stack on top of the at-fault driver’s insurance?

No. Illinois law reduces your UIM recovery by the amount you actually collected from the at-fault driver’s insurer. Your total recovery from both sources is capped at your UIM limit and at your actual damages, not the sum of both policies.

What if my UIM limits are the same as the at-fault driver’s limits?

You are not “underinsured” under the Illinois statute, so UIM does not apply and you receive nothing from it. This is why carrying higher UIM limits than the state minimum is important, it ensures your UIM coverage actually provides additional recovery.

Do I need my insurer’s permission before settling with the at-fault driver?

Give written notice first. Illinois law gives your insurer 30 days after notice to pay you the proposed settlement amount itself and keep its rights against the driver, and your policy may also require written consent. Settling without notice can jeopardize your UIM claim.

Talk to a Peoria UM/UIM Attorney

Call 309-673-0069 or contact us online for a free consultation. At Parker & Parker Attorneys at Law, we handle UM/UIM claims on a contingency fee basis, you pay nothing unless we recover compensation for you.

If you were injured by a driver without adequate insurance, the experienced Peoria personal injury lawyers can help you explore all available options.

Need a lawyer? This article is part of our Peoria Uninsured Motorist Lawyer practice area. Call Parker & Parker at 309-673-0069 for a free consultation.

How UIM Offset Calculations Work in Illinois