Underinsured Motorist Coverage: What Does Underinsured Mean?

Most policies provide uninsured and underinsured motorist coverage.  Uninsured motorist coverage is when you are in an accident and the at-fault driver has no insurance at all.  Your policy’s uninsured motorist coverage takes the place of the insurance the at-fault driver should have had and will cover your medical bills, lost wages, pain and suffering, and other related expenses.  Underinsured motorist coverage is a little different.  It comes into play when the at-fault driver has insurance, but it is not enough to cover your injury-related expenses. Suppose, for example, your car is rear-ended and you have soft-tissue injuries to your neck and back, abrasions to your body, and a fractured wrist.  Your medical bills total $18K.  You lost two weeks’ wages, totaling $2K.  The at-fault driver has his state’s minimum mandatory liability limits of 15/30, meaning $15K for one injured person, $30K total if there is more than one injured person.  His $15K limits will not even cover your medical expenses, let alone your lost wages, pain and suffering, and other expenses you may have had.  This is where your underinsured motorist limits kick in.  In a different situation, it would still apply even if the at-fault driver had substantial limits of 100/300 ($100K for one injured person, $300K total if there is more than one injured person), if you suffered serious injuries resulting in a much larger amount of expenses.