Underinsured Motorist Endorsement

An underinsured motorist endorsement is a type of supplemental automobile insurance that offers additional coverage to the policyholder in the event of an accident that is the result of another driver whose policy does not cover the total costs of the accident .

An underinsured motorist endorsement is an added provision or attachment an individual can add to their automobile insurance policy. An underinsured motorist endorsement provides insurance coverage to the policyholder and his or her passengers in the event of an accident caused by a driver who does not have sufficient coverage. The underinsured motorist endorsement covers bodily injury to the policyholder, insured members of the holder's household and passengers, and may also cover property damage. The endorsement typically pays the difference between what the other driver's insurance covers and what the underinsured motorist coverage will pay, subject to the maximum limit of the coverage.

For example, consider a situation where a driver A has $100,000 of insurance coverage. This driver gets in an accident with an underinsured motorist policyholder, driver B, where driver A is at fault. The insurance claim amount is $175,000, so driver A's insurance only covers $100,000 of that. The underinsured motorist endorsement would pay the policyholder, Driver B, the difference of $75,000 less deductibles.

Auto insurance is a policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident. Instead of paying out of pocket for auto accidents, people pay annual premiums to an auto insurance company. The company then pays all or most of the costs associated with an auto accident or other vehicle damage.

Auto insurance premiums vary greatly depending on age, gender, years of driving experience, accident and moving violation history and other factors. Most states mandate that all vehicle owners purchase a minimum amount of auto insurance, but many people purchase additional insurance like an underinsured motorist endorsement to further protect themselves. Auto insurance requirements vary from state to state; they usually last six or 12 months and are renewable.

Auto insurance coverage generally includes property coverage, meaning the damage to or theft of your car, liability coverage, which is the legal responsibility to others for bodily injury or property damage, and medical coverage, which covers the costs of treating injuries, rehabilitation and sometimes lost wages. Many states require additional coverages, like the underinsured motorist endorsement, or uninsured motorist coverage, which functions similarly, but reimburses the policyholder when an accident is caused by a driver who does not have auto insurance.