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.



RELATED TERMS
  1. Underinsured Motorist Coverage

    An auto insurance policy provision that extends coverage to include ...
  2. Uninsured Motorist Coverage - UM

    An addition to a standard automobile insurance policy that provides ...
  3. Class 1 Insurance

    Insurance that covers an individual occupying an owned vehicle, ...
  4. Class 2 Insurance

    Insurance that covers individuals that are not specifically named ...
  5. Assigned Risk

    A risk that an insurance company is required to provide coverage ...
  6. Insurance Coverage

    Insurance coverage is the amount of risk or liability covered ...
Related Articles
  1. Insurance

    How Much Car Insurance Do I Need?

    Find out to determine how much car insurance you actually need with this overview of the different types of coverage available in your policy.
  2. Insurance

    4 Types Of Insurance Everyone Needs

    Here are four forms of insurance that are vital to have.
  3. Managing Wealth

    6 Insurance Policies That Protect the Wealthy

    Here are six types of insurance that the wealthy use to protect their assets.
  4. Insurance

    Millennials Guide: Picking the Right Car Insurance

    Millennials fall into the category of high car-insurance rates. Check out some of the ways to save money, like owning an older car or leasing a vehicle.
  5. Insurance

    4 Frequently Asked Auto Insurance Questions

    Answers to four common questions about what and who is covered by an auto insurance policy.
  6. Financial Advisor

    5 Reasons You Should Check on Your Insurance

    Insurance gives you peace of mind, but you don't have to overpay for it. Rates change and discounts get added, which is why shopping around is important.
  7. Insurance

    Insurance, Excess Insurance and Reinsurance: What's the Difference? (ALL)

    Understanding the differences might help you avoid being overinsured or underinsured.
  8. Insurance

    4 Reasons Why Waiting To Buy Life Insurance Is a Bad Idea

    Understand the benefits of applying for and securing life insurance coverage while you are young and healthy, and learn the cost of waiting to get coverage.
  9. Insurance

    Why Your Company Insurance Coverage Isn’t Enough

    Even if you have group life or disability insurance, it pays to have individual coverage too.
  10. Insurance

    Understanding Your Insurance Contract

    Learn how to read one of the most important documents you own, your insurance contract.
RELATED FAQS
  1. Can your insurance company drop you after an accident?

    Learn how auto accidents can lead to insurance premium increases or policy cancellations, and why high-risk drivers are more ... Read Answer >>
  2. How does the 80% rule for home insurance work, and how do capital improvements affect ...

    Learn what the 80% rule in homeowner's insurance is and what homeowners need to do so their insurance company covers the ... Read Answer >>
  3. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
Trading Center