California’s "financial responsibility" law requires that all motorists carry a minimum level of liability insurance in case they cause an accident. That includes an accident that hurts a cyclist. The problem is that the minimum coverage ($15,000) is enough to cover minor injuries only. If any hospital stay is involved, the minimum coverage is unlikely to be enough. The majority of accidents involving a bicycle and a car send the cyclist to the hospital. Cyclists are thus placed at particular financial risk by "underinsured" motorists. 

If the cyclist owns a car, he can protect himself by purchasing "Uninsured/Underinsured" coverage.  The benefits of this coverage applies whether the driver who caused the accident is uninsured, or insured but carries an inadequate amount to cover the injuries. The coverage will apply even though the cyclist was on his bicycle and not in his car.  Thus, in the appropriate case, the cyclist’s UM/UIM coverage will step in and compensate the injured cyclist, up to the amount of the cyclist’s coverage limits.

For the cyclist to take advantage of the UM/UIM coverage, the cyclist may not accept a settlement from the driver without first obtaining his insurer’s permission. If the cyclist does accept a settlement, the UM/UIM may refuse to pay the cyclist’s claim.