What does the term "underinsurance" refer to in Florida auto insurance?

The term "underinsurance" in the context of Florida auto insurance specifically refers to having insufficient coverage limits to fully cover claims resulting from an accident. This means that the insured party does not have enough financial protection to pay for the damages or liabilities that may arise following an accident, which could include vehicle repairs, medical expenses, and other related costs.

In the case of an accident where the damages exceed the insured's coverage limits, the insured will be responsible for paying the difference out of pocket, potentially leading to significant financial strain. Underinsurance is critical to understand, as it highlights the importance of evaluating coverage needs based on individual circumstances and potential liabilities. Having adequate coverage allows drivers to ensure that they are adequately protected in the event of an accident.

The other options highlight different conditions of insurance: having no insurance at all refers to being completely uninsured, basic mandatory coverage signifies meeting the minimal legal requirements without additional protection, and excessive coverage for minor incidents indicates over-insuring, which does not align with the concept of underinsurance.