DEFINITION of 'Underinsured Motorist Coverage Limits Trigger'
One of the two triggers that can be specified by an insured party to protect against losses caused by an accident with a driver who has insufficient insurance. The underinsured motorist coverage limits trigger ensures that in the event of an accident caused by a driver with inadequate insurance, the underinsured motorist coverage comes into effect when the underinsured driver's liability limit is lower than that of the insured person or policy holder. The other trigger for underinsured motorist coverage is the damages trigger.
BREAKING DOWN 'Underinsured Motorist Coverage Limits Trigger'
For example, assume an insured person has underinsured motorist coverage up to $500,000 with a limits trigger. In the event of an accident with an at-fault driver who only has $100,000 of insurance coverage, an insurance claim of $150,000 would result in the policy holder's underinsured motorist coverage kicking in because of the limits trigger.