Georgia Adjuster Practice Test

Under what condition does underinsured motorist coverage provide first-party protection to an insured?

1. The insured is not at fault.

2. The other driver has insufficient liability limits and is "at-fault".

3. The accident occurred in a parking lot.

4. The insured has purchased extra liability coverage.

The correct answer is: The other driver has insufficient liability limits and is "at-fault".

Underinsured motorist coverage is designed to protect insured individuals when they are involved in an accident with a driver whose liability insurance coverage is insufficient to cover the damages they have sustained. In this case, the correct answer emphasizes that the other driver must be deemed "at-fault" and not have adequate liability limits to fully compensate the injured party. This coverage comes into play specifically when the damages to the insured exceed the at-fault driver's liability limits. By providing first-party protection, underinsured motorist coverage allows the insured to recover additional costs directly from their own policy after the at-fault party's insurance is exhausted. For instance, if a driver suffers significant medical expenses and property damage due to another driver’s negligence, which is not fully covered by the at-fault driver's liability insurance, the insured can file a claim under their underinsured motorist coverage. This condition underscores the critical aspect of liability in order for underinsured motorist coverage to be triggered. It is imperative that the other driver be responsible for the accident and have inadequate coverage, which creates the necessity for the first-party benefits that underinsured motorist coverage provides.