ECONOMICS

Detailed explanation-1: -Underinsured motorist coverage provides protection in case of an accident in which the at-fault driver doesn’t have enough insurance to cover all damages. This kind of coverage is a relatively inexpensive add-on to a regular auto insurance policy and can prove to be beneficial in the case of an accident.

Detailed explanation-2: -Being “underinsured” means a person has insurance coverage, but the limits may not be high enough to cover the full expenses of a claim.

Detailed explanation-3: -What is Underinsurance? The maximum liability to be incurred by the insurance company in the event of a total loss is based on the sum insured declared at the time of policy issuance, by the person insured. The customers are expected to pay premiums to ensure their assets remain protected from losses.

Detailed explanation-4: -The principle of underinsurance comes into play when you have to bear a portion of the total loss as the insurer is not liable to cover it. Hence, it is very important to be careful while buying a home insurance policy to avoid being underinsurance.