What situation does Underinsured Motorist Coverage (UIM) address?

Underinsured Motorist Coverage (UIM) is specifically designed to protect individuals from situations where they are involved in an accident with a motorist whose insurance coverage is inadequate to cover the full extent of the damages sustained. This means that while the at-fault driver may have insurance, the limits of that insurance policy are not sufficient to compensate the injured party for all their medical expenses, lost wages, and other damages resulting from the accident.

In this context, this coverage kicks in to bridge the gap between what the at-fault driver’s insurance covers and the actual expenses incurred by the injured party. For example, if the responsible driver has only $25,000 in liability coverage and the damages total $50,000, UIM would provide coverage for the remaining $25,000, ensuring that the insured party is not left to bear the financial burden alone.

The other options do not accurately reflect the purpose of UIM. A involves scenarios with no coverage at all, which is addressed by Uninsured Motorist Coverage (UM). C pertains to hit-and-run accidents, which can also fall under UM. D focuses solely on uninsured pedestrians, which is a narrow aspect of coverage that does not encompass the broader function of UIM. Thus, option B