Parametric insurance policies handle multiple triggers by establishing layers of specific, predefined criteria that must all be satisfied for a payout to occur. This approach results in a closer match between insurance protection and actual risks faced in the real world. Unlike traditional single-trigger insurance, which pays out based on just one metric—such as wind speed—multi-trigger parametric policies require several conditions to be met, helping to minimize basis risk, which is the discrepancy between the insurance payout and the policyholder’s actual loss. For instance, a policy could stipulate that a payout is only made if a Category 3 hurricane makes landfall and floodwaters rise above 5 feet in a certain region. This ensures that compensation is provided only when multiple, significant factors combine to cause notable damage, rather than for isolated incidents that may not meaningfully affect the insured party. https://www.simplesolve.com/blog/parametric-insurance-when-traditional-risk-models-fail-in-previously-safe-zones