In the context of Uninsured Motorist coverage, what does 'underinsured' refer to?

In the context of Uninsured Motorist coverage, 'underinsured' refers to situations where a driver carries insurance coverage that is insufficient to fully compensate for the damages or injuries inflicted in an accident. Specifically, this involves scenarios where the liability limits of the at-fault driver's insurance policy are less than the amount needed to cover the injured party’s losses. For instance, if the minimum required limits are $15,000 for bodily injury, but the injured party has medical expenses of $30,000, the at-fault driver’s coverage would be considered underinsured.

This concept is crucial for ensuring that victims are protected in circumstances where the other party's insurance does not provide adequate financial support following an incident. It differentiates itself from uninsured motorist situations, where the at-fault party does not have any insurance coverage at all. Thus, underinsured motorist coverage allows the injured party to pursue additional compensation from their own policy to bridge the gap created by insufficient coverage on the at-fault party's side.