These are very important coverages to know about. Here's a snapshot of each:
Uninsured ("UM") : even though every driver in North Carolina is required to have liability insurance, it obviously does not mean all do. Often, drivers have insurance then let it lapse for non-payment of premiums. UM coverage exists to protect you from these folks, so if you are in a wreck with an uninsured driver, this coverage will protect you.
Underinsured ("UIM"): This coverage helps when you are in a wreck and the amount the other driver has in coverage is inadequate to cover your damages. Let's say you are in a bad wreck, have hospital bills and lost time from work that exceeds $40,000. If the other driver has a North Carolina minimum limits policy of 30/60, you are in an underinsured situation (there's not enough coverage to pay your damages). It's important to know that in this situation, if the other driver "tenders the limits" (ie - pays all they have to under the policy), your insurance company now assumes adjustment/defense of the claim. They get a credit for what the liability insurer for the other driver paid. So, if you have been paid $30,000 by the other person's insurance, your UIM coverage is reduced by that $30,000. If limits are paid by other driver's insurance, and you and the UIM adjuster cannot agree on a settlement, you can request arbitration instead of having to file suit and go to trial. This can be very good for an injured person, as it reduces expenses and is more efficient.
Remember that both of these coverages are first party - that is, they are from your insurance company. North Carolina law says you have to be provided this coverage unless you waive it in a form that complies with North Carolina Department of Insurance requirements.
Check out your UIM/UM limits, and buy a good amount of coverage. Minimum limits for UIM (underinsured) is practically worthless, since the company gets a credit on what a liability carrier pays. So unless you get his by a driver from another state with lower minimum limits, you'll have no coverage once limits tendered.
-will
