Underinsured Motorist Coverage in MN: Stack Your Claim
The most common cause of a low insurance recovery in Minnesota is not that no policy existed. It is that the at-fault driver’s policy was too small to cover the actual damages. Minnesota’s minimum liability of $30,000 per person is exhausted by even moderate injuries. That is where underinsured motorist coverage comes in, if you had the coverage and if you followed the rules.
How UIM Differs From UM
UM (uninsured motorist) pays when the at-fault driver had no coverage. UIM (underinsured motorist) pays when the at-fault driver had coverage but not enough. UIM is a secondary insurance that fills the gap between the at-fault driver’s paid limit and the plaintiff’s UIM limit.
Minnesota UIM Minimums and Stacking
Every Minnesota auto policy must include UIM of at least $25,000 per person and $50,000 per accident under Minn. Stat. 65B.49 subd. 3a. Serious injuries commonly need more:
- Consider $100,000/$300,000 as a baseline for meaningful protection.
- Higher-value households often carry $250,000-$500,000 or more.
- Umbrella policies can add $1 million or more in UIM.
Stacking across household vehicles is generally permitted in Minnesota, subject to specific policy language.
How UIM Pays
Minnesota is a “difference in limits” state under Minn. Stat. 65B.49 subd. 4a. UIM pays the difference between the at-fault driver’s liability limits and your UIM limits, up to your damages. Example:
- At-fault liability: $30,000 (Minnesota minimum).
- Your UIM: $100,000.
- Your damages: $250,000.
- UIM available: $100,000 – $30,000 = $70,000.
- Total recovery: $30,000 (liability) + $70,000 (UIM) = $100,000.
To max out UIM, plaintiffs should carry higher UIM limits than the typical at-fault driver’s liability limits.
Consent to Settle: A Trap
Minnesota UIM law requires the plaintiff to notify their own UIM insurer before accepting the at-fault driver’s settlement. Under Minn. Stat. 65B.49 subd. 4a, if the UIM insurer wants to preserve subrogation against the at-fault driver, it may substitute its own payment to keep the subrogation right alive. Failing to give notice can void UIM coverage entirely.
Timing Rules to Follow
- Notify your UIM insurer as soon as it becomes clear liability limits are inadequate.
- Send a Schmidt-Clothier letter (named after the Minnesota case establishing the notice framework) with the settlement offer and demand for consent or substitution.
- Wait the required time (typically 30 days) before finalizing the underlying settlement.
- Preserve arbitration rights.
- File the UIM demand within the six-year contract statute.
UIM Interactions with No-Fault
Minnesota no-fault benefits are still primary. UIM comes into play after PIP is exhausted or when non-economic damages exceed the tort threshold. UIM does not double-pay bills already covered by PIP or health insurance without subrogation adjustments.
Arbitration
Most UIM policies require binding arbitration of disputed claims. Arbitration typically covers both liability and damages, with limited discovery and a panel or single arbitrator. Time and cost are usually lower than trial, and results are binding.
Common Reasons UIM Claims Fail
- No notice given before settling with at-fault driver.
- Consent-to-settle rule violated.
- Late claim under policy notice provisions.
- Coverage exclusions (business use, owned but uninsured vehicles).
- Disputes over damages that exceed at-fault driver’s limits.
Practical Steps
- Review your policy’s UIM limits today.
- Consider raising limits if premium allows.
- Consider an umbrella policy for additional UIM.
- Notify your insurer of a serious injury before considering any settlement.
- Use experienced counsel for any case where damages may exceed the at-fault driver’s limits.
Frequently Asked Questions
How much UIM should I carry in Minnesota?
The minimum is $25,000/$50,000 but that is rarely enough for a serious injury. Consider at least $100,000/$300,000 and higher if you have significant income, assets, or family responsibilities.
What is a Schmidt-Clothier letter?
It is the notice you send your UIM insurer before accepting the at-fault driver’s settlement. It offers the UIM insurer the chance to substitute its own payment to preserve subrogation. Missing this step can void UIM coverage.
Can I stack UIM across household vehicles?
Usually yes, subject to policy language. Multiple insured vehicles in one household can allow stacking of UIM limits, significantly increasing available coverage.
Does UIM include property damage?
Most Minnesota UIM covers bodily injury only. Property damage is typically covered by collision or a separate uninsured motorist property damage endorsement.
When should I demand arbitration on a UIM claim?
Once damages evaluation is complete and settlement negotiations have stalled. Preserve your arbitration rights in every communication and follow the policy’s notice provisions strictly.
Disclaimer: This article provides general information about Minnesota law and is not legal advice. For guidance about your specific situation, consult a licensed Minnesota attorney.
Talk to a Minnesota attorney at Metro Law Offices, Ltd.. Call 763-314-3800 or visit our contact page for a free consultation.
