| $25/50/15 |
| You will see three numbers when you are buying liability coverage. They represent (in the $ thousands) your liability limits for per person bodily injury, bodily injury for all persons injured in any one accident and property damage liability. Each state requires its own mandatory minimums.
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| Automobile Liability Insurance |
| Protection in case others hold you legally responsible for bodily injury and/or damage to property losses incurred as the result of a motor vehicle accident. In other words, coverage in case you cause an accident where there is either physical or property damage to other people. This is a general term that covers bodily injury (BI) liability and property damage (PD) liability.
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| Bodily Injury Liability Insurance (BI) |
| BI pays for injuries to other people when the insured vehicle’s driver is legally at fault. This coverage is required in Colorado, New Mexico, Utah and Wyoming. The mandatory minimum limit is $25,000 per person.
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| Collision Coverage |
| Coverage for when your car is damaged as a result of colliding with another object—a brick wall, for example, or a rollover. This insurance applies only to the car. It doesn’t cover whatever the car collided with (that’s what your property damage liability is for). This coverage is optional.
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| Comprehensive Coverag |
| Coverage for when your car is stolen or damaged in ways that don’t involve a collision. Examples include: hail damage, glass breakage, fire, vandalism, collision with an animal, flood, earthquakes, falling objects and theft. This coverage is optional.
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| Declarations Page ("Dec Page") |
| The first page of the insurance policy that generally includes your name, address, the insured property, its location and description, the policy period (how long the coverage will be in force), the amount of the insurance coverage, the premiums and additional specific information provided by the insured.
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| Deductible |
| This is your out-of-pocket expense that you agree to pay for losses under a certain amount or in other words the amount the insurer agrees to pay over a certain amount. If you can afford to carry a higher deductible on collision and comprehensive coverage, you can substantially lower your costs.
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| Economic Benefits |
| Tangible, out-of-pocket expenses, such as medical expenses, rehabilitation expenses, lost wages and essential services.
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| Financial Responsibility Law |
| Typically, this refers to the law that requires motorists to have auto insurance, however most states also permit a bond or cash deposit as evidence of the ability to pay for negligence in causing losses to others from the operation of a motor vehicle. In 47 states and the District of Columbia, it is illegal to operate a vehicle without obtaining proof of insurance.
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| McCarran-Ferguson |
| Enacted by Congress in 1945, this law grants authority to the states to tax and regulate the business of insurance (see regulation).
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| Medical Payments Coverage (MP or MedPay) |
| This coverage pays the doctor, hospital bills, and funeral expenses for injuries to you and to members of your family who live with you, regardless of who caused the accident. MedPay is the principal auto injury coverage sold in states with traditional tort laws.
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| Monetary Threshold |
| In some "no-fault" states, a dollar amount for medical and rehab expenses that must be reached in order to file a lawsuit for damages for non-economic damages (i.e. pain and suffering) against the driver who caused the accident. For example, under Colorado's old no-fault law, you could sue for pain and suffering if you racked up $2500 in medical expenses (nullifying the no-fault law). (See verbal threshold).
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| No-Fault Auto Insurance |
| There are different versions of no-fault auto insurance laws in 12 states and Puerto Rico. The idea is to discourage lawsuits by allowing policyholders to recover financial losses from their own insurance company without having to prove that anyone is at fault in an accident. Motorists may only sue for severe injuries and for pain and suffering if their case meets certain conditions. Seven states, including Utah, require that you meet a minimum dollar threshold to be able to bring a lawsuit over damages over and above your economic losses. Florida, Michigan, New Jersey, New York and Pennsylvania use a verbal description as a threshold (i.e. severe disfigurement, disability or death). In New Jersey, Pennsylvania and Kentucky, when they buy insurance, motorists may choose to reject the lawsuit threshold and keep their right to sue for any auto-related injuries.
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| Non-Economic Benefits |
| Intangible benefits, such as pain and suffering, inconvenience, emotional stress, impairment of quality of life, loss of consortium, etc.
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| Personal Injury Protection (PIP) |
| This a package of medical benefits that provides broad protection for medical costs, lost wages, loss of essential services normally provided by the injured person (i.e. a babysitter, housekeeper), and funeral costs. It is usually associated with a no-fault auto insurance system.
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| Preferred Provider Organization (PPO) |
| In 1991, Colorado enacted a statute that allows insurance companies to offer a "PPO" option. That means for a reduced rate, the consumer agrees to use a specific PPO for medical treatment for injuries suffered in auto accidents. This is an option only. Consumers can save up to 25-percent on the medical portion of their auto insurance premium. This is part of Colorado's no-fault coverage, which expires July 1, 2003.
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| Property Damage Liability (PD) |
| This coverage is for when you damage someone else’s property with your vehicle. Usually it’s someone’s car, but it includes property like buildings, utility poles and garage doors. This coverage is required in Colorado, New Mexico, Utah and Wyoming. The mandatory minimum limit is $50,000.
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| Rate |
| This is the cost of a unit of insurance (usually $1,000 worth). Insurance is based on the history of loss experience for similar risks. What a driver pays for auto insurance is based in part on past experience by that company with drivers of the same age, sex, marital status, driving record and similar make and model of car.
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| Regulation |
| The insurance industry is state regulated. State insurance laws are administered by insurance departments whose job includes approval of rates and policy forms, investigation of company practices, review of annual financial statements, periodic examination of books and liquidation of insolvent insurers (see McCarran-Ferguson).
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| Third party |
| In an insurance contract, a third party is anyone other than the policyholder and the family members covered under the insurance policy. The policyholder is the first party. The insurance company is the second party in the contract. Anyone else is a third party.
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| Threshold |
| A cutoff point, which, if met, allows the injured person to file a lawsuit to attempt to be paid for damages for bodily injury, such as "pain and suffering," from the driver who caused the accident (or usually his or her insurance company).
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| Tort |
| A wrongful act resulting in damage or injury, on which a civil action can be based. This doesn’t include breach of contract.
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| Uninsured/Underinsured Motorist Coverage (UM) |
| It pays (up to the coverage limit) the insured person and other passengers in the vehicle when they’re injured as the result of an accident where the at-fault driver is uninsured, underinsured or a hit-and-run. This also comes in a second form - UMPD - to cover damage to your vehicle if hit by an uninsured or underinsured driver. However, most people do not purchase the second form because they carry collision and comprehensive coverage.
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| Verbal (or Descriptive) Threshold |
| A description of the type of serious injury a person must sustain before being able to file a lawsuit for damages for bodily injury against the driver who caused the accident. (See monetary threshold)
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