In what scenario would a motorist typically be classified as underinsured?

A motorist is classified as underinsured primarily when they have insufficient liability insurance. This means that the level of coverage they hold is inadequate to cover the damages or injuries that may occur in the event of an accident where they are at fault. For instance, if a motorist has a liability limit of $50,000 while the damages resulting from an accident total $100,000, the motorist would be considered underinsured since their coverage doesn’t meet the full extent of the liabilities they could face.

This classification is essential because underinsurance can lead to significant financial consequences for the motorist, including personal liability for the excess amount. The concept of being underinsured is specifically related to the amount of coverage in relation to the potential risks a motorist may face on the road, which is distinct from other scenarios like having no insurance at all, having low premiums that still provide adequate coverage, or switching insurers, which do not inherently affect the level of coverage in place.