Glossary of Terms (Part 4)
June 1st, 2008
Limits - The most an insurance company will pay for a specific insurance coverage. Individuals can choose the limit that meets their needs. Many states have laws that specify the minimum limits an insured must purchase.
No-Fault Auto Insurance - Laws permitting the individual automobile accident victim to collect monies directly from their own insurance company for medical and hospital expenses regardless of whose fault the accident was. 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. Eight states, including Colorado and 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.
Personal Injury Protection (PI) - 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. This coverage is mandatory in Colorado. The minimum limits are $50,000 medical (5 years), $50,000 rehabilitation (10 years), approximately $20,000 lost wages (based on loss of gross income per week), approximately $10,000 for essential services, and a $1,000 death benefit-this adds up to about $130,000 of coverage.
Source: autoinsuranceadvocate.net