What defines an "underinsured motorist"?

An underinsured motorist is defined as a driver who possesses an insurance policy but does not have enough coverage to fully compensate for damages incurred in an accident. This situation often arises when the costs of medical bills, vehicle repairs, or other damages exceed the limits of the at-fault driver's insurance policy. In such cases, the injured party may seek compensation through their own underinsured motorist coverage, if they have it, which is designed to protect them in scenarios where another driver cannot adequately cover the damages.

Circumstancially, this concept hinges on the difference between the insured's liability and the actual damages sustained, making it crucial for drivers to understand their insurance coverage limits and the potential risks of encountering underinsured motorists on the road.