Underinsured Motorist Endorsement

AAA

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.

INVESTOPEDIA EXPLAINS '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

    An auto insurance policy provision that extends coverage to include ...
  2. Collision Insurance

    A type of auto insurance coverage. Collision Insurance will reimburse ...
  3. Auto Insurance

    A policy purchased by vehicle owners to mitigate costs associated ...
  4. Insurance Claim

    A formal request to an insurance company asking for a payment ...
  5. Endorsement

    1. A legal term that refers to the signing of a document which ...
  6. Equivalent Flat Rate

    The rate at which a flat rate insurance guarantee scheme and ...
RELATED FAQS
  1. Why are economists interested in the consumer surplus?

    Economists are interested in consumer surplus because it measures economic welfare, plays a large part in changing market ... Read Full Answer >>
  2. Why does zero-based budgeting require ongoing evaluation and management?

    Zero-based budgeting must have ongoing evaluation and management due to the fact a zero-based budget requires management ... Read Full Answer >>
  3. How will consumer packaged goods companies' stocks react to changes in oil prices?

    The stock prices of consumer packaged goods companies should react favorably to any significant decline in oil prices. Lower ... Read Full Answer >>
  4. What financial ratios are most useful for an investor to evaluate the liquidity of ...

    An insurance company, like any other nonfinancial company, needs access to liquidity in case it needs to fulfill its debt ... Read Full Answer >>
  5. How does quantifying fixed overhead volume variance show whether a company is profitable ...

    Fixed overhead volume cannot definitively prove a company is profitable, but it can be used to provide an excellent indication ... Read Full Answer >>
  6. Are there significant seasonal patterns in the electronics sector?

    There is strong seasonality in the electronics sector, with sales of nearly all kinds of electronics – computers, digital ... Read Full Answer >>
Related Articles
  1. Options & Futures

    Beginner's Guide To Auto Insurance

    Find the perfect policy that suits both your coverage and budgetary needs.
  2. Options & Futures

    Top Tips For Cheaper, Better Car Insurance

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

    Do You Need Casualty Insurance?

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

    The True Cost Of Owning A Car

    Driving is often the most convenient way to get around, but it'll cost you.
  5. Retirement

    How Much Is Enough To Finance Your Retirement?

    Keep these points in mind as you calculate your retirement asset goal.
  6. Economics

    Explaining the Cash Budget

    A cash budget is a plan for the inflows and outflows of cash for a business or an individual.
  7. Savings

    20 Ways To Pay Less At Costco

    There are plenty of little-known Costco shopping hacks that can save you big bucks at the register, and help you avoid the notorious spending hangover.
  8. Stock Analysis

    Costco, Target or Walmart: Which is the Best Bet?

    These three retailers have all been long-term winners. It that likely to continue? If so, which is the best bet?
  9. Budgeting

    10 Worst And Best Vacation Cities In The U.S.

    The many costs of planning a vacation will put a stress on most people’s finances, but where you choose to go can be what really makes your travel budget.
  10. Professionals

    An Advisor's Guide to Prof. Liability Insurance

    A guide to what financial advisors need to know about professional liability insurance.

You May Also Like

Hot Definitions
  1. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  2. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  3. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  4. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  5. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center