Rhode Island Insurance Adjuster Exam

What is an underinsured claim?

1. A claim where the insured has no insurance

2. A claim where the at fault party's insurance limits are insufficient to cover expenses

3. A claim that is denied due to insufficient proof

4. A claim that exceeds the insured's policy limits

The correct answer is: A claim where the at fault party's insurance limits are insufficient to cover expenses

An underinsured claim refers specifically to situations where the insurance coverage of the party at fault is not enough to fully compensate the injured party for their losses. This often occurs in accidents or incidents where the damages are substantial, but the responsible party's insurance policy has limits that fall short of covering the full costs, such as medical bills, property damage, and other related expenses. In such cases, the injured party may pursue an underinsured claim to seek additional compensation from their own insurance policy, provided that they have opted for underinsured motorist coverage. In the context of the other options, having no insurance would not involve underinsurance, as that situation is simply described as uninsured. A claim that is denied due to insufficient proof relates more to the validity or documentation surrounding the claim rather than the limitations of coverage. Lastly, while a claim that exceeds the insured's policy limits is related to insurance limits, it typically describes a situation of liability, not underinsurance, which specifically involves the other party's coverage inadequacy. Thus, recognizing the nuance of underinsurance is essential in understanding how claims against insufficient coverage are processed.