Underinsured Motorist Coverage

Underinsured motorist coverage is part of auto insurance policies that protects you if you sustain bodily injury or property damage in an accident with an underinsured motorist or driver. Underinsured motorist auto insurance coverage is required in some states, but it is always a good idea to carry underinsured motorist coverage if you can afford it.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Oct 30, 2020

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If you have a look at your auto insurance policy, you’ll almost certainly find a clause relating to “under insured motorist” coverage. This is a kind of coverage that comes as standard in most auto insurance policies, because it comes at very nominal fee.underinsured motorist coverage

The purpose of the underinsured motorist coverage is to ensure that in the event of property or bodily damage caused by a motorist with insufficient (or no) insurance the insurance company agrees to pay out any additional costs above those that the under insured party’s insurer will meet.

For example; if you are in a collision with another driver and your car is severely damaged, and then when you ask the other driver’s (who was found to be at fault for the accident) insurance provider to pay the repair bill – they tell you that though your bill is $20,000 the other drive only had coverage for $10,000. In this instance if you have underinsured motorist coverage your insurer will pay out the balance of the repair bill.

This does not mean that the other driver no longer has an obligation to pay the difference on the repair bill; it just means that your insurance company will pay out the money (so you can get back on the road) and then attempt to recover the sum from the other driver. This will usually be through suing the other driver in your name, and it means that you will need to cooperate with your insurance company during legal proceedings to help them reclaim the money.

What’s the advantage of underinsured motorist coverage?

Many states require people to take out a minimum level of coverage but it is hard to ensure 100% compliance and many drivers who do comply only purchase the minimum level of cover. In many instances the insurance benefits paid out for these drivers in the event of an accident for which they are held liable – will not be enough to pay for the repairs, and possibly health care or lost working time for the other party. If you have underinsured motorist coverage then your insurance provider will take of those bills and then seek financial redress from the other driver on your behalf.

If you aren’t sure if your policy has provision for underinsured motorist coverage, check your insurance contract or talk to your insurance broker or agent to find out.

(To read more about uninsured motorist coverage outside of our glossary, please read our more detailed article on the subject.) 

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