What Happens if the At-Fault Driver Lacks Enough Coverage
When the other driver's coverage runs out, your own policy's underinsured motorist coverage pays the rest, if you have it.
Your own policy is the backup the other driver's insurer won't be
Every state requires drivers to carry some liability coverage, but the amount required is often low. A driver can be fully insured and still not carry enough to pay for a serious injury or a totaled car. When that gap shows up, their policy pays what it owes and stops. It isn't required to pay more, even if your damages are much higher.
That's where underinsured motorist coverage on your own policy comes in. It exists specifically for this gap. If the at-fault driver's limit is lower than your damages, your insurer pays the difference up to your own limit. You're making a claim against your own policy, not borrowing from theirs, which is why having this coverage in place before anything happens matters so much.
Whether this coverage is automatic or something you have to add depends on where you live. Some states require insurers to offer it and you have to decline it in writing if you don't want it. Others leave it optional with no prompt at all. Check your declarations page for underinsured motorist coverage specifically, since it's easy to assume it's included when it isn't.
The exception is when the at-fault driver has no insurance at all rather than too little. That falls under uninsured motorist coverage, a related but separate line on your policy. Some insurers combine the two, some split them, so if you're checking your coverage, look for both terms.
A rear-end collision with a driver carrying the state minimum
Say you're stopped at a light and the driver behind you doesn't brake in time. The crash isn't your fault, and the police report backs that up. Their insurer accepts the claim and offers to pay, but their policy limit is low, and your medical bills and car repair costs add up to more than that limit covers. The other driver's insurer isn't going to pay beyond what their policy allows, no matter how clear the fault is.
This is the moment underinsured motorist coverage matters. You'd file a claim with your own insurer for the difference between what the other driver's policy paid and what your damages actually cost. Your insurer reviews the claim much like any other, checking the bills, the repair estimates, and the fault determination. If you'd added this coverage when you set up your policy, this step is straightforward. If you hadn't, you'd be covering that gap yourself, which is the scenario this coverage is built to prevent.
How much underinsured motorist coverage should you actually carry?
A reasonable target is coverage that matches or comes close to your own liability limits. If you carry solid liability coverage to protect your assets, it makes sense to carry similar underinsured motorist coverage to protect yourself when the situation is reversed.
Think about what a serious injury would actually cost, not just a fender bender. Lost income, ongoing medical care, and long recovery times add up fast, and state minimum limits on other drivers' policies rarely come close. Since this coverage is often inexpensive relative to the protection it adds, many people choose to carry more here than they might in other categories. Check with your insurer on what levels are available and how the cost compares as you raise it.
Compare quotes now that you know which coverage actually protects you when the other driver doesn't have enough.
Does underinsured motorist coverage raise my premium a lot?
Usually not by much, since it rarely gets used and insurers price it accordingly. It tends to cost far less than liability or collision coverage for the protection it adds. The exact cost depends on your insurer, your state, and the limit you choose, so ask for a side by side quote showing the premium with and without it, or at different limit levels, before deciding it's not worth it.
Can I still sue the at-fault driver for the rest of what I'm owed?
Technically yes, but it's often not worth pursuing if they don't have the assets to pay a judgment. Courts can award you money, but collecting it is a separate problem if the person has little income or property. This is exactly why underinsured motorist coverage exists, since it pays you directly without needing to chase the other driver personally. Check with an attorney if your damages are large enough that suing still makes sense alongside your claim.
Does filing an underinsured motorist claim raise my own rates?
It depends on your insurer and state, since this wasn't your fault and many insurers treat it differently than an at-fault claim. Some states have rules limiting how insurers can use not-at-fault claims against you. Ask your insurer directly how they handle underinsured motorist claims before you file, so you know what to expect and can decide how to proceed with full information.
The other driver's insurance was never going to be the thing that fully protects you, your own policy was.
