Illinois Underinsured Motorist Claims (2026)

Last Updated: November 3, 2026

Underinsured motorist (UIM) coverage is first-party insurance that may pay when the at-fault driver’s liability limits are too low for your injuries. 215 ILCS 5/143a-2 includes underinsured-motorist coverage equal to the uninsured-motorist coverage where that coverage exceeds the limits in 625 ILCS 5/7-203. Disputes often turn on notice, the amounts actually recovered, more than one policy, and arbitration.

You did the responsible thing. You bought car insurance. You paid the extra premium for the higher limits. Then the at-fault driver hits you on War Memorial Drive, totals your car, breaks your wrist, and you find out they carry the bare-minimum $25,000 Illinois liability policy. Your hospital bill from OSF Saint Francis is already $80,000.

This is exactly the situation Illinois underinsured motorist (UIM) coverage exists for. But filing the claim is not as simple as calling your own agent. There are sequencing rules, setoff traps, stacking arguments, and arbitration deadlines the average Peoria driver has never heard of. This guide walks through what UIM actually is in Illinois, when you can use it, and the seven procedural traps that decide whether your claim gets paid in full or short-changed.

What does “UIM” mean in an Illinois auto policy?

Underinsured motorist coverage is first-party insurance you buy from your own carrier to protect yourself when the other driver’s liability policy is not enough to cover your damages. “First-party” means you are the customer making the claim against your own insurance company, not against a stranger’s. That single fact changes the legal rules in ways most drivers never realize until they file.

Two terms are worth nailing down in plain English before we go further:

• Uninsured motorist (UM) coverage applies when the at-fault driver has no insurance at all, or in a hit-and-run where the driver cannot be identified.
• Underinsured motorist (UIM) coverage applies when the at-fault driver has insurance, but their bodily-injury limits are too low to fully pay for your harm.

215 ILCS 5/143a requires uninsured-motorist coverage for bodily injury or death, in the limits set out in 625 ILCS 5/7-203, on a liability policy for a motor vehicle designed for use on public highways that is required to be registered in this State or is principally garaged here. Those bodily-injury limits are not less than $25,000 because of bodily injury to or death of one person in one crash and, subject to that one-person limit, not less than $50,000 because of bodily injury to or death of two or more persons in one crash. 215 ILCS 5/143a-2 lets a named insured reject additional uninsured-motorist coverage above the section 7-203 limits in writing. Under section 143a-2(4), on or after July 1, 1983, the policy must include underinsured-motorist coverage equal to the total uninsured-motorist coverage where that uninsured-motorist coverage exceeds the section 7-203 limits. The changes to subsection (4) by the amendatory Act of the 93rd General Assembly apply to policies issued or renewed on or after December 1, 2004. Uninsured-motorist limits of $100,000 and $300,000 therefore include underinsured-motorist coverage in that same amount. When your uninsured-motorist limits exceed section 7-203, matching underinsured-motorist coverage is part of the statutory scheme; read your declarations page to see what you actually bought.

When can I file a UIM claim, and when can’t I?

You can file a UIM claim in Illinois only when three conditions line up. Miss any one of them and the claim may not be ripe; your carrier may deny it on procedural grounds before it reaches the merits of your injuries.

The three triggers:

• The other driver is legally responsible, and your own contributory fault does not bar the claim. Under 735 ILCS 5/2-1116, in an action for bodily injury, death, or physical damage to property based on negligence, or in a product-liability action based on strict tort liability, recovery is barred if the plaintiff’s contributory fault is more than 50 percent of the proximate cause of the injury or damage. If that fault is not more than 50 percent of the proximate cause, damages are diminished in proportion to the plaintiff’s fault.
• The vehicle meets the underinsured definition in section 143a-2(4). That definition uses the sum of the bodily-injury liability limits, bonds, or other security Illinois law requires, applicable to the driver or other legally responsible person and to the vehicle. The sum must be less than your underinsured-motorist limit. If the at-fault driver has a $25,000 limit and you have $100,000 of underinsured-motorist coverage, the vehicle can meet that definition. The insurer’s limit is then the coverage less the amounts actually recovered. If the driver has $250,000 and you have $100,000, that sum is not less than your limit.
• Amounts actually recovered leave damages unpaid. Medical bills, lost wages, future care, and pain and suffering all count toward the damages. If those damages are paid in full from the liability coverage, the underinsured-motorist limit has nothing left to pay. A settlement for less than the liability limits does not, by itself, preclude the claim.

When you cannot use UIM:

• Your contributory fault is more than 50 percent of the proximate cause, in an action covered by section 2-1116.
• The at-fault driver’s liability limits are higher than your UIM limits (you are “over-insured” by their policy, not under).
• You did not preserve your UIM rights when settling with the at-fault driver, the consent-to-settle trap covered in the next section.

Do I have to settle with the at-fault driver first before tapping my UIM?

Section 143a-2(7) lets a policy deny underinsured-motorist payment until the bodily-injury liability limits, or a portion of them, applicable to the underinsured motor vehicle and its operators have been partially or fully exhausted by payment of a judgment or settlement. The same subsection says a judgment or settlement for less than those limits does not preclude the underinsured-motorist claim. Section 143a-2(4) then measures the insurer’s limit as the coverage less the amounts actually recovered.

The order of operations, drawn from standard Illinois UIM policy language, looks like this:

1. Pursue the at-fault driver’s liability carrier first. Their bodily-injury limits, say, $25,000, are the primary pot of money. You negotiate, demand, or sue to access those limits.
2. Give your underinsured-motorist carrier written notice before you accept that settlement. Section 143a-2(6) says the insurer shall not exercise subrogation against the underinsured motorist where the insurer received written notice before the settlement and failed to advance a payment equal to the tentative settlement within 30 days after receiving the notice. Many policies also say that a release without notice can forfeit the coverage. Subrogation means the insurer’s right to recover from the at-fault driver after paying the insured.
3. Then claim the underinsured-motorist coverage less the amounts actually recovered under the applicable bodily-injury policies, bonds, or other security on the underinsured motor vehicle.

What this looks like in real numbers: At-fault driver pays their $25,000 limit. You carry $100,000 UIM. Your damages are $150,000. Your UIM claim is for the $75,000 difference (your $100,000 UIM minus the $25,000 already paid). Your total recovery in this example is $100,000, your UIM cap. The remaining $50,000 above that cap illustrates how setoff works here only. Other household policies, higher limits, dependents’ coverage, or assets outside this example can change what is recoverable.

Action item if you are in this situation right now: Do not sign a release with the at-fault driver’s insurer until you have given your own underinsured-motorist carrier written notice. Section 143a-2(6) gives that insurer 30 days after the notice to advance a payment equal to the tentative settlement. If it does not, it shall not exercise that subrogation.

How much UIM coverage do I actually have?

The amount payable depends on the subtraction in section 143a-2(4) and on the policy terms section 143a-2(5) permits. The subtraction example below uses amounts actually recovered. It does not decide a policy that covers more than one vehicle.

Amounts actually recovered. Section 143a-2(4) sets the insurer’s limit at the underinsured-motorist coverage less the amounts actually recovered under the applicable bodily-injury policies, bonds, or other security on the underinsured motor vehicle. Example: $100,000 of coverage less $25,000 actually recovered leaves up to $75,000.

More than one policy or vehicle. Section 143a-2(5) says nothing in that section prohibits an insurer from setting policy terms that limit recovery to the higher of the applicable limits and that do not increase the limits because more than one motor vehicle is covered under the same policy. 215 ILCS 5/143a(1) says the limits for any coverage for any vehicle under the policy may not be aggregated with similar coverage, from the same insurer or another insurer, applying to other motor vehicles, for bodily injury or death in one crash. The closing sentence of section 143a(3) says nothing in that section may be construed to prevent an insurer from extending coverage under terms and conditions more favorable to its insureds than the section requires.

Here is how the two concepts interact:

Scenario	What you might recover
$100,000 UIM, single policy, single car, at-fault carrier paid $25,000 (setoff applies)	Up to $75,000 from UIM
$100,000 of coverage and three cars on the same policy	Section 143a-2(5) permits a term that the limit is not increased because three vehicles are on that policy
$100,000 of coverage and a separate $100,000 policy	Section 143a-2(5) permits a term that recovery may equal, but may not exceed, the higher of the applicable limits
Resident relative’s policy in the same household	The policy may provide coverage. A Class 2 label comes from the policy. Section 143a-2(5) permits a higher-of-limits term, and the closing sentence of section 143a(3) states the more-favorable-terms sentence.

Pull every auto policy in the household. Another policy may provide coverage. Section 143a-2(5) permits a higher-of-limits term, and the closing sentence of section 143a(3) states the more-favorable-terms sentence. The policy has to be read with both.

Why is my own insurance company fighting me? (First-party vs. third-party claims)

When you make a UIM claim, you are a first-party claimant under your policy. That is different from a third-party liability claim against someone else’s insurer, but it does not mean every coverage or value dispute is non-adversarial. Genuine policy, coverage, and fact disputes can still be contested. 215 ILCS 5/155 is a separate court remedy when the company’s liability, the amount payable, or unreasonable delay is in issue and the court finds the action or delay vexatious and unreasonable; it is not automatic because the carrier disagrees with your valuation.

215 ILCS 5/154.6 lists acts that constitute improper claims practices when committed without just cause and in violation of Section 154.5 (knowingly, in violation of the Act or its rules, or with frequency indicating a persistent tendency). For UIM files, several listed duties often matter in practice:

• Reasonably prompt acknowledgment of communications (section 154.6(b)).
• Reasonable standards for prompt investigation and settlement (section 154.6(c)).
• Good-faith effort to settle promptly, fairly, and equitably when liability has become reasonably clear (section 154.6(d)).
• A reasonable investigation based on all available information before refusing to pay a claim (section 154.6(h)).
• A reasonable and accurate explanation when a claim is denied or a compromise is offered (section 154.6(n)).

A district court applying Illinois law has emphasized that not every coverage or factual dispute is automatically bad faith under Section 155, and that arbitration may require mutual consent under the policy unless a separate obligation applies. Some UIM files are still handled with the same adversarial posture as third-party liability work; the question is whether handling crosses the line from a legitimate dispute into conduct that violates Section 154.6 without just cause under Section 154.5, or becomes vexatious and unreasonable under Section 155 in court.

Does a UIM dispute go to court or arbitration in Illinois?

Whether a UIM dispute goes to court or arbitration depends on your policy, not on one universal Illinois rule for every underinsured-motorist claim. Statutory uninsured-motorist arbitration under the Insurance Code is a different framework from underinsured-motorist coverage in the policy. In Phoenix Insurance Co. v. Rosen, 249 Ill. 2d 32 (2011), the Illinois Supreme Court distinguished those paths and upheld policy language that provided for three arbitrators and trial de novo after arbitration. If your policy requires arbitration, the dispute is usually resolved there first unless the policy or the parties provide otherwise.

The mechanics when a policy uses a three-arbitrator UIM clause:

• Demand for arbitration. You (through counsel) make a written demand. The carrier responds.
• Panel selection. Each side picks an arbitrator; those two pick a neutral third. Sometimes the neutral is a retired judge or a senior trial lawyer.
• Discovery. Limited but real, depositions, medical records, often a medical exam by a doctor the carrier hires.
• Hearing. Location, format, and schedule depend on your arbitration agreement. The policy at issue in Phoenix Insurance Co. v. Rosen applied local rules of evidence and procedure to the arbitration; read your clause for how hearings are conducted.
• Award. The panel issues a written decision. How final it is depends on your policy: many policies make a smaller award binding and let either side reject a larger one and demand trial de novo, and Phoenix Insurance Co. v. Rosen upheld that kind of clause. Court review of a binding award is limited.

That is different from a tort lawsuit against the at-fault driver, where you ordinarily have a right to a jury trial in circuit court. Policy arbitration is private, often faster, and turns on the clause you bought, including panel selection and any trial-de-novo option.

Can my insurance company act in bad faith on a UIM claim, and what can I do about it?

Section 155 can apply when a suit puts the company’s liability on the policy, the amount payable, or an unreasonable delay in settling the claim in issue. The court must find the action or delay vexatious and unreasonable.

Two distinct legal hooks matter here:

Section 155 of the Illinois Insurance Code. 215 ILCS 5/155 says the court may allow reasonable attorney fees, other costs, and an additional amount. That additional amount may not exceed any one of three alternatives: 60 percent of the amount the party is entitled to recover against the company, exclusive of costs; $60,000; or the excess of that recovery over the amount the company offered before the action. The source note is P.A. 93-485, effective January 1, 2004.

Separate tort exposure in unusual cases. Section 155 is the primary Illinois remedy for vexatious and unreasonable first-party claim handling. Separate tort theories require independent facts beyond ordinary claim delay, such as conduct that supports a recognized tort apart from the insurance contract. Do not assume every low UIM offer creates a separate emotional-distress claim.

Red flags that should make you ask whether bad faith is in play:

• Unexplained delays. Months pass with no decision after you’ve sent all medical records.
• Lowball offers untethered to documented damages. A $15,000 offer on a $150,000 medical record set with no explanation.
• Hostile or accusatory adjuster tone. Treating you like a third-party adversary, not their own insured.
• Refusing to identify the basis for a denial. “We’ve decided not to extend an offer” with no reasoning.
• Demanding statements or examinations under oath without legitimate purpose.

Many claimants never raise Section 155 because they do not know it exists. Documenting the timeline, every letter, every call, and every offer, is what makes a Section 155 argument credible when the handling was vexatious and unreasonable, not merely because the carrier disagreed with your valuation.

What evidence do I need to win a UIM claim?

UIM claims live and die on documentation, and when your policy sends the dispute to arbitration, the record should be organized before the hearing. Decision-makers evaluate the evidence and testimony presented under the rules that apply in that forum, whether arbitration or court. You prove causation and damages on the record you build.

The core evidence stack:

• Crash documentation. The police crash report, photos of vehicle damage, scene photos, witness statements, dashcam footage if you have it.
• Liability proof. Anything that establishes the other driver was at fault, citations issued, admissions in the report, intersection geometry, surveillance video from a nearby business.
• The at-fault driver’s policy limits. A declarations page or a written statement from the liability carrier confirming the limits. You cannot prove “underinsured” without proving how little the other driver carried.
• Complete medical records. Every ER visit, every follow-up, every imaging study, every PT note. Treatment at OSF Saint Francis, UnityPoint Methodist, the Illinois Neurological Institute, Midwest Orthopaedic, all of it. Gaps in treatment or missing records can be questioned whenever they bear on causation or damages; complete charts reduce that risk in arbitration or court.
• Medical bills and lien information. The bills, the explanation-of-benefits forms, any subrogation notices from health insurers or Medicare/Medicaid.
• Lost-wage documentation. Employer letters, pay stubs, tax returns, disability paperwork.
• Future-care projections. If your injuries require ongoing care, a treating physician’s written opinion on future treatment and costs.
• Your own UIM policy. The full policy, declarations page, endorsements, and the arbitration clause. Not just the bill.

One piece of evidence often overlooked: the timeline of the carrier’s conduct. Every dated letter, every recorded call summary, every offer. This file is what supports a Section 155 argument if the handling crosses into bad faith.

How long do I have to file a UIM claim in Illinois?

The filing period against the at-fault driver and the deadline in the underinsured-motorist policy are different. The tort period is in the statute. The policy deadline is in the contract. Missing either one can end the claim.

Three deadline categories to watch:

• The underlying tort filing period. 735 ILCS 5/13-202 says an action for an injury to the person shall be commenced within 2 years next after the cause of action accrued. That two-year sentence does not include damages resulting from first degree murder or a Class X felony when the perpetrator is convicted of that crime. The section has a separate escrow-account sentence, and the confession-tolling sentence does not apply to a unit of local government subject to the Tort Immunity Act. If that period passes against the at-fault driver, the underinsured-motorist claim can be affected because it depends on the legal liability of that driver.
• The contractual UIM deadline. Many Illinois UIM policies impose their own deadline, often two years from the crash date, for either filing suit, demanding arbitration, or providing notice. The exact wording varies. Read your policy.
• The notice requirement. Most policies require “prompt” notice of a claim and “prompt” written notice when you intend to pursue UIM. Late notice is a defense the carrier will raise.

The practical takeaway: pull the policy out the day you suspect the at-fault driver is underinsured, and either give written notice yourself or have an attorney do it. Do not let the limitations clock or the contractual clock run while you are still negotiating with the other driver’s insurer.

When should I call a UIM attorney?

Call before you sign any release with the at-fault driver’s insurer. Once you sign a release without your UIM carrier’s written consent, you may have given up the UIM claim entirely, and the value of one signature can run into six figures.

Specific moments to make the call:

• The at-fault driver’s insurer offers their policy limits early. (Sometimes this is a trap to close the file before you realize your UIM is bigger.)
• Your medical bills are climbing past what the at-fault driver’s limits can cover.
• Your own carrier asks for a recorded statement on the UIM side.
• You receive a reservation-of-rights letter from your own carrier.
• Your own carrier denies UIM, delays without explanation, or makes an offer disconnected from your documented damages.
• Your own carrier raises a setoff, anti-stacking, or consent-to-settle defense.

Parker & Parker handles underinsured-motorist disputes for central-Illinois clients in Peoria, Tazewell, Woodford, Knox, and McLean Counties. The procedural defenses recur, but each policy and file is different. What you can preserve often depends on notice, limits proof, and releases before you respond to either carrier. If an underinsured driver hit you in this region, a Peoria personal injury lawyer who handles UIM claims should review your policy and the at-fault driver’s limits before you sign anything.

Frequently Asked Questions

Is underinsured motorist coverage required in Illinois?

Yes, when the uninsured-motorist coverage exceeds the limits in 625 ILCS 5/7-203. 215 ILCS 5/143a-2 then requires underinsured-motorist coverage equal to the total uninsured-motorist coverage. That inclusion sentence applies on or after July 1, 1983, and the changes to subsection (4) by the amendatory Act of the 93rd General Assembly apply to policies issued or renewed on or after December 1, 2004. 215 ILCS 5/143a requires uninsured-motorist coverage for bodily injury or death at the section 7-203 limits. Additional uninsured-motorist coverage above those limits may be rejected in writing under section 143a-2(2).

Can I file a UIM claim if I was partly at fault for the crash?

Yes, when the claim is an action covered by 735 ILCS 5/2-1116 and the plaintiff’s contributory fault is not more than 50 percent of the proximate cause of the injury or damage. Damages are then diminished in proportion to that fault. If the fault is 30 percent of the proximate cause, the damages are reduced by that share. If it is more than 50 percent of the proximate cause, recovery is barred.

Will my insurance rates go up if I file a UIM claim?

Premium increases, cancellation, and nonrenewal are different questions. A UIM claim can still involve comparative-fault or coverage disputes on your file even when another driver caused the crash. 215 ILCS 5/143.19a limits cancellation where the sole basis is the insurer’s payment of a claim under certain circumstances, and 215 ILCS 5/143.19b addresses nonrenewal where the sole basis was reporting claims closed without payment. Those sections do not by themselves establish a general prohibition on premium increases for not-at-fault claims. If your premium, renewal, or cancellation changes after a UIM claim, ask the carrier in writing for the reason and have the notice reviewed.

What is the difference between UIM and MedPay in Illinois?

MedPay (medical payments coverage) pays covered medical expenses up to the limit shown on your declarations page, regardless of fault. UIM pays covered damages when the at-fault driver’s liability limits are not enough. The two coverages may both apply, but setoff, coordination, and policy language should be reviewed before assuming the total recovery. MedPay is often paid quickly. UIM commonly involves negotiation or policy arbitration.

Do I have to use my own insurance company’s arbitrator if there is a UIM dispute?

When a policy uses a three-arbitrator clause, each party typically names one arbitrator and those two select a neutral third. Read your policy’s selection, qualification, and timing language for how panel members are chosen and replaced.

How long does an Illinois UIM claim take to resolve?

Illinois law does not set one calendar deadline for every UIM file. How long resolution takes depends on notice, limits proof, the medical course, coverage disputes, whether the policy sends the matter to arbitration, and how promptly the carrier investigates and communicates. None of that eliminates prompt-handling obligations under the policy and applicable law. Unreasonable delay can still matter under Section 155 when a court finds the delay vexatious and unreasonable, not merely because the carrier disagreed with value.

Can I sue my own insurance company for bad faith on a UIM claim?

The usual Illinois remedy is 215 ILCS 5/155. In an action where the company’s liability, the amount payable, or an unreasonable delay is in issue, the court may allow reasonable attorney fees, other costs, and an additional amount that does not exceed one of the three alternatives stated above, when the court finds the action or delay vexatious and unreasonable. Separate tort claims require independent misconduct beyond an ordinary coverage dispute and should be evaluated case by case.

Related Articles

• Peoria Personal Injury Lawyer (Hub)
• Peoria Car Accident Lawyer
• Illinois Car Insurance Requirements
• Hit-and-Run Accidents in Illinois
• Illinois Personal Injury Statute of Limitations
• Uber and Lyft Crash in Illinois: Which Insurance Pays, and How Much?
• Insurance Policy Limits in Illinois: How a $25,000 Cap Changes Everything About Your Case