Underinsured Motorist Coverage

Promises compensatory damages because of bodily injury sustained by an insured and caused by an accident arising out of the ownership, maintenance, or use of an underinsured motor vehicle. It should be noted that the insurer pays only after the limits of liability under any applicable bodily injury bonds or policies have been exhausted by payment of judgments or settlements, or a tentative settlement has been made between an injured insured and the insurer of the underinsured motor vehicle.

“Underinsured motor vehicle” is defined as “a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident buts its limit for bodily injury liability is less than the limit of liability for this coverage.” This, in effect, allows an insured to recover, up to the limit of liability scheduled for underinsured motorists coverage, the difference between his or her actual damages for bodily injury and the amount of the liability insurance carried by the at-fault driver.