Underinsured Drivers

Authored by , LegalMatch Legal Writer and Attorney at Law

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When Is a Driver Considered "Underinsured?"

If someone's policy limit does not cover all of the damages sustained during an accident, they are underinsured. In most cases, an underinsured driver has purchased only the minimum policy required by state law. Underinsured motorists become personally liable for all auto accident damage they caused beyond their insurance limits.

However, in many cases, an underinsured motorist has little personal assets, leaving the injured party with no alternative for compensation for their damages.     

What Is Underinsured Motorist Coverage?

A policy that includes underinsured motorist coverage protects a policy holder if the party responsible for the damage is underinsured. If a driver carries underinsurance coverage and is injured by an underinsured driver, they should be able to collect the maximum amount - commonly referred to as the "policy limits" - from the other driver's insurance, plus have their additional expenses paid for by their own insurance company.

Very few states require drivers to hold underinsured motorist coverage. However, it can be extremely helpful in the event someone is seriously injured in an auto accident and the other driver has limited insurance coverage.   

Is It Always Beneficial to Have Underinsured Motorist Coverage?

An underinsured policy may state that the policyholder can only settle with their insurer. If that policyholder has already settled with the other driver's insurance company, the policy may not require their own insurance company to pay anything.

Thus, if someone with underinsured motorist coverage has received compensation for a portion of their damages as the result of a settlement with the at-fault party, their underinsured motorist coverage may not provide any additional support.

How Does a Party with Uninsured Motorist Coverage Recover Their Losses?

There are several steps which must be taken before someone can receive benefits under their underinsured motorist coverage. Most insurance agencies require proof that:

Do I Need A Lawyer?

If you have been involved in an accident and have been severely injured, you should speak with a lawyer immediately. Automobile insurance requirements vary by state, and thus a local personal injury lawyer will be able to answer questions about your individual situation and to provide advice about disputes involving underinsured drivers.

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Last Modified: 08-26-2014 02:31 PM PDT

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