Underinsured motorist coverage compensates the insured for:

Underinsured motorist coverage is specifically designed to protect individuals when they are involved in an accident with a driver whose insurance coverage is insufficient to fully compensate for the damages incurred. This type of insurance steps in to cover the gap between what the underinsured driver’s insurance pays and the actual costs of the damages suffered by the insured.

In this context, if the at-fault driver does not carry enough insurance to cover the medical expenses, property damage, or other losses, the underinsured motorist coverage will provide the necessary funds to address those deficiencies. This is particularly crucial in scenarios where medical bills, rehabilitation costs, or vehicle repairs exceed the limits of the at-fault party’s insurance policy.

Other options, while they address important aspects of insurance coverage, do not accurately characterize the specific function of underinsured motorist coverage. For instance, repairs to one’s own vehicle after an accident typically fall under collision coverage, while medical expenses regardless of fault are generally covered by no-fault insurance plans. Losses from collisions with identified parties pertain to traditional liability coverage rather than underinsurance issues. Thus, the essence of underinsured motorist coverage is to fill in the gaps when an improperly insured third party is unable to compensate for all incurred losses.