Underinsured motorist coverage is provided by your insurance company per your automotive insurance policy. It comes into play when you have been involved in a motor vehicle accident in Massachusetts and the person responsible for the accident does not have enough liability coverage to cover your losses and pain and suffering stemming from the accident. However, you are only entitled to that amount of underinsured coverage to the extent that your UIM policy exceeds the liability limits of the person who caused the accident. Let us take an example to flush this out.
Suppose that you have $80,000.00 in damages following the accident. You also have $100,000.00 in UIM coverage from your insurance company. But, the person who hit you only has the required, minimum amount of liability coverage of $20,000.00. In that case, you would first collect the $20,000.00 from the other driver's liability coverage. Then you would make a first-party claim (your underinsured claim) against your auto insurance carrier. But the most you could collect for the UIM claim is $80,000.00. That is because you are only entitled to UIM benefits to the extent that they exceed the total amount of the at-fault driver's liability policy. Therefore, the most you could collect would be a total of $100,000.00, and not $120,000.00.