diff --git a/bugsnag/client.py b/bugsnag/client.py
index 987ab517..558b074a 100644
--- a/bugsnag/client.py
+++ b/bugsnag/client.py
@@ -476,7 +476,12 @@ def report_timeout_to_bugsnag():
                 return real_handler(aws_event, aws_context)
             except Exception as exception:
                 if self.configuration.auto_notify:
-                    self.notify(exception)
+                    self.notify(
+                        exception,
+                        unhandled=True,
+                        severity='error',
+                        severity_reason={'type': 'unhandledException'},
+                    )
 
                 raise
             finally:
diff --git a/tests/test_client.py b/tests/test_client.py
index 285b3ddd..f01b8589 100644
--- a/tests/test_client.py
+++ b/tests/test_client.py
@@ -1843,6 +1843,7 @@ def my_handler(event, context):
         payload = self.server.events_received[0]['json_body']
         event = payload['events'][0]
 
+        assert event['unhandled']
         assert event['exceptions'][0]['message'] == 'oh dear'
         assert event['metaData']['AWS Lambda Event'] == {'a': 1}
         assert event['metaData']['AWS Lambda Context'] == {
@@ -1878,6 +1879,7 @@ def my_handler(event, context):
         payload = self.server.events_received[0]['json_body']
         event = payload['events'][0]
 
+        assert event['unhandled']
         assert event['exceptions'][0]['message'] == 'oh dear'
         assert event['metaData']['AWS Lambda Event'] == {'z': 9}
         assert event['metaData']['AWS Lambda Context'] == {