What is the definition of "underinsured motorist coverage"?

Underinsured motorist coverage is designed to protect individuals involved in an accident with a driver who does not have enough insurance to cover the damages resulting from the accident. This type of coverage becomes crucial when the at-fault driver’s liability limits are lower than the costs incurred by the injured party. It helps ensure that victims receive adequate financial compensation when involved in such scenarios, thereby enhancing the victim's financial protection beyond what the insufficient coverage of the other driver provides.

The other options, while related to vehicle insurance, do not accurately capture the essence of underinsured motorist coverage. For instance, coverage for damages while driving uninsured would pertain to a completely different scenario where the driver has no insurance at all. Coverage that applies when your own insurance policy is exhausted doesn't specifically address the interaction with another motorist's insufficient insurance. Lastly, a policy that allows for higher limits of liability focuses on increasing coverage amounts rather than addressing the gap created by another driver’s insufficient coverage.