Glossary term
Underinsured Motorist Coverage
Underinsured motorist coverage is auto insurance coverage that may help when an at-fault driver has insurance, but their limits are too low to cover the loss.
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Written by: Editorial Team
Updated
What Is Underinsured Motorist Coverage?
Underinsured motorist coverage is auto insurance coverage that may help when an at-fault driver has insurance, but their policy limits are too low to cover the loss. It is often discussed with uninsured motorist coverage because both address the risk that the other driver's insurance will not be enough.
This coverage matters because a driver can carry the legal minimum and still be unable to cover a serious injury claim or large accident loss. Underinsured motorist coverage can provide another layer under your own policy, subject to the policy terms and state rules.
Key Takeaways
- Underinsured motorist coverage can help when the at-fault driver's limits are too low.
- It is different from uninsured motorist coverage, which deals with no insurance.
- The coverage often has its own policy limit.
- State rules affect whether the coverage is required, optional, or offered in a particular form.
- It can be especially important when another driver's minimum limits would not cover a severe injury claim.
How It Works
Suppose another driver causes an accident and has liability coverage, but the damage is larger than that driver's policy limit. Underinsured motorist coverage may help fill part of the gap under your own policy, depending on the policy terms, the available limits, and state law.
The coverage does not make every accident fully insured. It provides a limit of protection against the specific problem that the at-fault driver's insurance is too small.
Why It Matters
State minimum liability limits can be much lower than the cost of a severe accident. That means the other driver may technically have insurance and still not have enough. Underinsured motorist coverage is designed for that middle ground.
For households, the practical question is whether the policy would still protect them if another driver's insurance stops short.
Underinsured Versus Uninsured
Coverage | Basic problem it addresses |
|---|---|
The at-fault driver has no insurance or cannot be identified | |
Underinsured motorist coverage | The at-fault driver has insurance, but the limits may not be enough |
The difference is simple, but important. One starts with no usable insurance. The other starts with some insurance that may run out.
The Bottom Line
Underinsured motorist coverage can help when an at-fault driver's insurance is not large enough to cover the loss. It is one of the most important coverage lines to review if you want your auto policy to protect you from another driver's low limits, not just your own liability risk.