Under what condition does Underinsured Motorist (UIM) coverage apply?

Underinsured Motorist (UIM) coverage applies specifically when the at-fault driver has insufficient coverage to pay for the damages caused by the accident. This means that if the responsible party’s liability limits are lower than the total costs incurred by the injured party—such as medical bills, lost wages, and other damages—the injured party can turn to their own UIM coverage to help cover the difference.

This type of coverage is vital because it protects individuals from financial losses resulting from accidents involving drivers whose insurance policies do not provide enough compensation. Additionally, many states, including Louisiana, require insurers to offer this type of coverage, ensuring that drivers can protect themselves against the possibility of underinsured drivers on the road.

In contrast, the other options describe scenarios where UIM coverage would not be applicable. For instance, if an at-fault driver has no insurance, uninsured motorist coverage would come into play instead. When an insured driver is at fault, their own liability insurance would cover the damages. Similarly, in the case of a hit-and-run driver, uninsured motorist coverage is typically invoked as well.