What coverage pays for bodily injury when the at-fault driver's policy limits are exhausted?

Underinsured Motorist Coverage is specifically designed to address situations where the at-fault driver's insurance coverage is insufficient to cover all damages incurred by an injured party. In cases of bodily injury, if the other driver's policy limits are exhausted and do not fully compensate the injured party, Underinsured Motorist Coverage steps in to provide additional financial protection.

This type of coverage allows the injured party to seek compensation from their own insurance policy when the liable driver's insurance is inadequate, ensuring that they have access to necessary funds for medical expenses, lost wages, and other related costs. It serves as a crucial safety net for individuals who are involved in accidents with drivers who may not have enough insurance to cover the damages inflicted.

In contrast, Liability Coverage is intended to cover damages the insured is responsible for, Collision Coverage pertains to damages to the insured's own vehicle in an accident regardless of fault, and Comprehensive Coverage addresses non-collision-related incidents, such as theft or natural disasters. Therefore, they do not serve the purpose of compensating for bodily injuries when the at-fault driver's policy limits are reached.