What Is the Underinsured Motorist Coverage Limits Trigger?
Let me explain the underinsured motorist coverage limits trigger directly to you: it's one of two triggers you can choose in your auto insurance to shield yourself from losses in an accident caused by a driver with insufficient coverage.
This trigger kicks in when you're in an accident with a driver whose insurance is inadequate, specifically when their liability limit is lower than yours as the policyholder. The alternative is the damages or coverage trigger, which works differently.
Key Takeaways
- The underinsured motorist coverage limits trigger provides insurance for damages from an at-fault motorist lacking enough auto insurance to cover your full losses.
- This coverage is a low-cost addition to your standard auto policy and can be crucial during an accident.
- Underinsured motorist endorsements are required in many states and usually run for six to 12 months.
Understanding the Underinsured Motorist Coverage Limits Trigger
You buy auto insurance for risks like damaging your own car, harming someone else's vehicle, or injuring others, but I want to point out a risk you might overlook: getting hit by a driver without enough insurance to cover your injuries or damages.
In such cases, you could have a valid claim against that driver, but if they lack assets or proper insurance, they might just file for bankruptcy, leaving you with nothing to recover.
That's where underinsured motorist coverage comes in as part of your policy. It handles property damages, your bodily injuries, and those of your insured family or passengers. When you file a claim, it covers the gap between what the at-fault driver's insurance pays and the total amount you're owed.
Under- vs. Un-insured Motorist Coverage
Remember, underinsured motorist coverage isn't the same as uninsured motorist (UM) coverage, which applies if the at-fault driver has no insurance whatsoever. That said, these are often packaged together.
Whether separate or combined, they're typically cheap additions to your policy but offer real value. Back in 2015, the Insurance Research Council reported that about one in eight drivers were underinsured. Driving without insurance is illegal in every state except New Hampshire, and while underinsured is better than uninsured, it's still a problem you need to protect against.
Example of Underinsured Motorist Coverage Limits Trigger
Suppose you have underinsured motorist coverage up to $500,000 with a limits trigger. If you're in an accident with an at-fault driver who only has $100,000 in coverage, and your claim is $150,000, your underinsured coverage activates due to the limits trigger, covering the difference.
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