What does "underinsured motorist coverage" protect against?

Underinsured motorist coverage is designed to protect an insured driver in the event that they are involved in an accident with another driver whose liability insurance is inadequate to cover the damages incurred. This type of coverage acts as a safety net for the insured, ensuring that they can recover the financial losses that result from an accident caused by a driver who does not have enough insurance to fully compensate for the damages.

In situations where the at-fault driver possesses only the minimum required insurance or an insufficient amount, underinsured motorist coverage allows the injured party to seek compensation from their own insurance policy for any uncovered expenses, such as medical bills, lost wages, or pain and suffering. This makes it a critical component of personal auto insurance, as it provides additional financial security beyond what the other driver can offer through their liability coverage.