Underinsured Motorist Coverage Limits Trigger

Key takeaways

• Underinsured motorist (UIM) coverage protects you when an at-fault driver’s liability limits are too low to cover your damages.
• The “limits trigger” activates UIM when the other driver’s liability limit is less than your own policy limit.
• UIM is usually an inexpensive endorsement and is often offered or required by states; auto policies are commonly written for six- or twelve-month terms.
• Consider UIM coverage when you want protection beyond what another driver’s policy can pay.

What is the UIM limits trigger?

The UIM limits trigger is a way to specify when underinsured motorist coverage applies. With this trigger, your insurer pays the difference between the at-fault driver’s liability payment and the amount you actually need — up to your UIM limit — when the at-fault driver’s liability limit is lower than your UIM limit.

There is a second common trigger, often called the damages or coverage trigger, which focuses on whether your damages exceed what the at-fault driver’s insurer paid rather than comparing policy limits. The two triggers determine how and when your UIM benefit becomes available.

How UIM coverage works

1. An accident occurs and the other driver is at fault.
2. That driver’s liability insurer pays up to its policy limit for your injuries and property damage.
3. If your total damages exceed the at-fault driver’s payout, your UIM (if you have it and the trigger conditions are met) can cover the shortfall up to your UIM limits.
4. Your insurer may seek reimbursement (subrogation) from the at-fault driver’s insurer after paying your claim.

UIM typically covers medical expenses, lost wages, pain and suffering, and vehicle damage — subject to the terms of your policy.

Underinsured vs. Uninsured motorist coverage

• Uninsured motorist (UM) coverage applies when the at-fault driver has no insurance at all.
• Underinsured motorist (UIM) coverage applies when the at-fault driver has insurance but their policy limits are insufficient to cover your damages.
  These coverages are frequently sold together and are relatively low-cost ways to protect yourself against gaps in another driver’s financial responsibility.

Example

If your UIM limit is $500,000 and the at-fault driver’s liability limit is $100,000, a $150,000 claim would be handled as follows:
* The at-fault driver’s insurer pays $100,000.
* Your UIM coverage (under the limits trigger) would cover the remaining $50,000, up to your UIM limit.

Why buy UIM coverage?

• Protects you from financial shortfalls when another driver’s insurance is inadequate.
• Affordable compared with potential out-of-pocket medical and recovery costs.
• Many states require insurers to offer UM/UIM coverage; requirements and default options vary by state.

Practical tips

• Review your UIM limits—it’s often wise to match or exceed typical liability limits in your area.
• Check whether your state defaults to a limits trigger or a damages trigger; policy language matters.
• Consider combining UM and UIM coverage for broader protection.
• If you’re unsure how much coverage you need, discuss scenarios and limits with your insurer or an independent agent.

Summary

Underinsured motorist coverage with a limits trigger protects you when an at-fault driver’s liability coverage is too low to cover your damages. It’s an affordable supplement to standard auto insurance and can prevent significant out-of-pocket costs after an accident. Review your policy language and state rules to ensure you have appropriate protection.