What is Underinsured Motorist Coverage?

Underinsured motorist coverage protects drivers from other drivers who do not carry any or enough auto insurance.

How Does Underinsured Motorist Coverage Work?

Let's say you're driving your car and are hit by another driver. The other driver causes $10,000 of damage to your car. The other driver is underinsured, meaning that he has car insurance, but only the legal minimum, which doesn't cover the amount of damage to your car.

Because you have underinsured motorist coverage, your insurance company will pay for the difference in damage costs. So, for example, if the other driver's insurance will only pay for $5,000 of damage, your insurance policy will pay the other $5,000.

Note that in this example, nobody was hurt. As is often the case, auto accidents cause more than just car damage of $10,000. They might cause medical bills, lost wages, and pain and suffering.

Why Does Underinsured Motorist Coverage Matter?

Some states require the purchase of underinsured or uninsured motorist coverage. It is important to note that underinsured coverage and uninsured coverage are separate, though in many states you can buy them together.

Ask an Expert about Underinsured Motorist Coverage

All of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Underinsured Motorist Coverage.

Be the first to ask a question

If you have a question about Underinsured Motorist Coverage, then please ask Paul.

Ask a question
Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.

Verified Content You Can Trust
verified   Certified Expertsverified   5,000+ Research Pagesverified   5+ Million Users