Underinsurance Law and Legal Definition

Under insurance refers to an agreement to indemnify property damage upto a certain amount less than property’s full value. It is insurance under a policy that provides inadequate benefits.

Following is a case law defining underinsurance. “Underinsurance means insurance in an amount insufficient to cover possible loss. Any other interpretation of underinsurance would mean the victim cannot recover part of the underinsurance limit he has bought and paid for, and that portion of the limits also would be illusory. [American States Ins. Co. v. Estate of Tollari, 362 N.W.2d 519, 522 (Iowa 1985)].

Underinsurance-motorist coverage means insurance for loss caused by a negligent driver, having not enough liability insurance to cover damages.