What Is the Underinsured Motorist Coverage Limits Trigger?
The underinsured motorist coverage limits trigger is one of the two features you can have in your insurance policy to safeguard yourself from losses incurred during an accident with a driver who has insufficient insurance coverage.
This trigger ensures coverage in scenarios where the at-fault driver’s insurance liability limit is lower than the coverage amount specified in your own policy. The result is that you’ll be protected even if the other party’s insurance falls short. The second trigger for underinsured motorist coverage is the ‘damages trigger’.
Key Insights
- The underinsured motorist coverage limits trigger provides financial protection against damages from an at-fault driver with insufficient auto insurance.
- This type of coverage is a relatively affordable add-on to standard auto insurance policies, offering significant benefits during accidents.
- Many states mandate underinsured motorist endorsements, which typically cover periods ranging from six to 12 months.
Why You Need Underinsured Motorist Coverage
People buy auto insurance for reasons like risk of vehicle damage, causing damage to another person’s vehicle, or the possibility of causing injury or fatality. But many overlook the hazard posed by encountering a driver who hasn’t secured enough insurance.
In such situations, you might have rightful claims against this at-fault driver but still fail to collect damages if they can’t afford compensation or declare bankruptcy. To protect yourself in these circumstances, consider adding underinsured motorist coverage to your auto insurance.
This supplemental insurance helps cover property damages, bodily injuries, and injuries to family members or passengers in your car, making up for what the at-fault driver’s insurance cannot cover.
Underinsured vs. Uninsured Motorist Coverage
It is important to distinguish underinsured motorist coverage from uninsured motorist (UM) coverage. The latter protects you against damages caused by a driver who has no insurance whatsoever. These two coverages are frequently bundled, either as separate add-ons or combined, and tend to be cost-effective given the protection they offer.
As of 2015, about one in eight drivers on the road were under-insured according to the Insurance Research Council. The legal requirement to carry auto insurance is almost universal across states, making underinsured motorist coverage a crucial aspect of comprehensive road safety.
A Scenario Illuminated: Underinsured Motorist Coverage Limits Trigger
Imagine you hold underinsured motorist coverage up to $500,000 with a limits trigger. You’re involved in an accident where an at-fault driver has insurance coverage of only $100,000. If you file a claim for $150,000, your underinsured motorist coverage will activate, covering the remaining $50,000 after the $100,000 from the at-fault driver’s insurance.
Related Terms: uninsured motorist coverage, coverage trigger, auto insurance, endorsement, bankruptcy.
References
- Connecticut General Assembly. “Auto liability insurance requirements in other states”.
- Insurance Research Council. “One in Eight Drivers Uninsured”, Page 1.
Get ready to put your knowledge to the test with this intriguing quiz!
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## What is meant by Underinsured Motorist Coverage Limits Trigger?
- [x] It refers to the point when the underinsured motorist coverage begins to apply because the other driver's insurance limits are insufficient.
- [ ] It references the point when both drivers agree to settle without involving insurance.
- [ ] It indicates when an insurance policy automatically renews.
- [ ] It denotes the start date of the insurance policy term.
## Which of the following situations would typically activate Underinsured Motorist Coverage Limits Trigger?
- [ ] Both parties are equally at fault in a collision.
- [x] The at-fault driver's insurance coverage is inadequate to cover all damages and injuries.
- [ ] The accident involves no injuries.
- [ ] The at-fault driver's coverage exceeds damages.
## Why is Underinsured Motorist Coverage Limits important?
- [ ] It increases deductible amounts automatically.
- [x] It helps cover damages when the at-fault driver's insurance is insufficient.
- [ ] It provides rental car reimbursement.
- [ ] It is solely for covering vehicle repairs.
## Underinsured Motorist Coverage Limits Trigger is irrelevant if:
- [ ] The accident is a single-car accident.
- [ ] The at-fault driver has been consuming alcohol.
- [x] The other driver has ample liability coverage to cover all damages.
- [ ] The accident occurs at a low speed.
## Can Underinsured Motorist Coverage Limits exceed the primary liability coverage of the at-fault driver?
- [x] Yes, it can cover the additional damages up to its own limits.
- [ ] No, it must be equal to or less than the primary coverage.
- [ ] Yes, but only for medical expenses.
- [ ] No, it covers only legal fees.
## Which costs are typically covered by Underinsured Motorist Insurance once triggered?
- [x] Medical expenses, lost wages, and pain and suffering.
- [ ] Maintenance costs for the vehicle.
- [ ] Minor roadside assistance.
- [ ] Inspections and car washes.
## Is Underinsured Motorist Coverage Limits Trigger applicable when multiple parties are at fault for an accident?
- [x] Yes, it can apply if the responsible parties collectively do not carry enough insurance coverage.
- [ ] No, it's solely for single-party fault scenarios.
- [ ] Only if damage exceeds a certain threshold.
- [ ] Only in no-fault states.
## Which of the following is NOT a benefit of Underinsured Motorist Coverage?
- [ ] Covering additional losses not covered by the at-fault driver’s insurance.
- [x] Preventing rate increases on existing policies.
- [ ] Offering peace of mind for being protected against underinsured motorists.
- [ ] Supplementary to other insurance coverages.
## How can an insured person determine the need to increase Underinsured Motorist Coverage?
- [ ] By tracking gas mileage and vehicle maintenance costs.
- [ ] By downgrading their vehicle model.
- [x] By evaluating local average liability coverages and accident rates.
- [ ] By checking only their own financial status.
## Is Underinsured Motorist Coverage Limits Trigger specific to a single insurance provider?
- [ ] Yes, each provider defines it uniquely.
- [x] No, it is a standard term across the insurance industry.
- [ ] Yes, but only small-private insurance firms.
- [ ] No, it only applies to government-run programs.
