Glossary of Terms (Part 5)
January 5th, 2008
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.
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.
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.
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.
Source: autoinsuranceadvocate.net