DEFINITION of 'Underinsured Motorist Endorsement'

An added provision or attachment to an automobile insurance policy that 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.

BREAKING DOWN 'Underinsured Motorist Endorsement'

For example, consider a situation where a driver A only has $100,000 of insurance coverage. This driver A gets in an accident with a 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.

RELATED TERMS
  1. Underinsured Motorist Coverage ...

    One of the two triggers that can be specified by an insured party ...
  2. Uninsured Motorist Coverage - UM

    An addition to a standard automobile insurance policy that provides ...
  3. Underinsurance

    Inadequate insurance coverage by the holder of a policy. In the ...
  4. Class 1 Insurance

    Insurance that covers an individual occupying an owned vehicle, ...
  5. Class 2 Insurance

    Insurance that covers individuals that are not specifically named ...
  6. Automatic Additional Insured

    Additional insurance coverage that is automatically included ...
Related Articles
  1. Insurance

    How Much Car Insurance Do I Need?

    Find out to determine how much car insurance you actually need with this overview of the different types of coverage available in your policy.
  2. Insurance

    Do You Need Casualty Insurance?

    Find out how different types of coverages can protect you and which policy is right for you.
  3. Insurance

    How to Find the Right Car Insurance

    Finding the right car insurance can be difficult. However with these strategies, you can get the most for your money, protect your assets and your health.
  4. Insurance

    Top Tips for Cheaper, Better Car Insurance

    Accident, theft, vandalism - make sure your coverage will protect you when you need it most.
  5. Insurance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  6. Insurance

    Insurance Coverage: A Business Necessity

    Don't go to work without this policy in place - especially if your work is in your home.
  7. Insurance

    Millennials Guide: Picking the Right Car Insurance

    Millennials fall into the category of high car-insurance rates. Check out some of the ways to save money, like owning an older car or leasing a vehicle.
  8. Insurance

    For Top-Notch Insurance Coverage, Compare Quotes

    Find out how to use and compare policy options to get the best coverage at the best price.
  9. Insurance

    How to Protect Your Income No Matter What

    What does it mean to insure your income? Here are a variety of ways to do it and some insights into when it might make sense to invest in income insurance.
  10. Insurance

    Dividend-Paying Whole Life Insurance: What to Know

    Many whole life insurance policies pay dividends. Here are what policyholders need to consider.
RELATED FAQS
  1. Can my insurance company refuse me coverage?

    Insurance isn't always as straightforward as other products. Insurers can deny coverage in many different instances:Non-Renewal ... Read Answer >>
  2. Can your insurance company drop you after an accident?

    Learn how auto accidents can lead to insurance premium increases or policy cancellations, and why high-risk drivers are more ... Read Answer >>
  3. How might having insurance increase moral hazard?

    Would you drive safely if your insurance company knew nothing about your driving habits? Learn how insurance increases moral ... Read Answer >>
  4. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  5. What are some examples of industries that practice price discrimination?

    Understand the various types of insurance coverage offered in the insurance marketplace, and learn why each policy should ... Read Answer >>
  6. Why would you want a monthly benefit versus a daily benefit?

    An insurance benefit is the amount of money paid to or on behalf of the policyholder. Depending on what kind of insurance ... Read Answer >>
Hot Definitions
  1. Operating Ratio

    A ratio that shows the efficiency of a company's management by comparing operating expense to net sales. Calculated as:
  2. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  3. Pro Forma

    A Latin term meaning "for the sake of form". In the investing world, it describes a method of calculating financial results ...
  4. Trumpcare

    The American Health Care Act, also known as Trumpcare and Ryancare, is the Republican proposal to replace Obamacare.
  5. Free Carrier - FCA

    A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. ...
  6. Portable Alpha

    A strategy in which portfolio managers separate alpha from beta by investing in securities that differ from the market index ...
Trading Center