Glossary of Terms
Hawaii Insurance Laws
Each state has their own insurance laws that drivers must comply with. For example, Hawaii specifically is a no-fault car insurance state. That means in the case of an accident, each individual must pay for their own damages and injuries up to their personal injury protection limit regardless of who was at fault. Hawaii also has its own minimum liability insurance requirements with the minimum of $20,000 per person with an aggregate limit of $40,000 per accident and $10,000 for all damages arising out of damage to or destruction of property. It is important to know which laws apply in your state so you can prevent any huge costs at your expense.
You can learn more about the auto and home insurance laws here: http://capitol.hawaii.gov/
Glossary of Automobile Insurance Terms:
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.
Optional coverage for when your car is damaged as a result of colliding with another object—a brick wall, for example, or a rollover. It also can come into play if you hit a pothole that severely damages your car. This insurance applies only to your car. It doesn’t cover whatever the car collided with (that’s what your property damage liability is for). According to 2004 data from the National Association of Insurance Commissioners, 72 percent of insured drivers carry this coverage.
Other than Collision
This is optional 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, damage from an animal, flood, earthquakes, falling objects and theft. Other than Collision insurance is limited to the value of your car at the time of the accident.
Collision and Other than Collision coverage may not be cost effective towards vehicles that are more than a decade old.
This is an expense you agree to pay for out of pocket. Usually losses up to the set amount, such as $250 or $1,000. If you can afford to carry a higher deductible on collision and comprehensive coverage, you can substantially lower your insurance costs.
No-Fault Auto Insurance
There are different versions of no-fault auto insurance laws in 12 states and Puerto Rico. In theory, the system is supposed 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 injuries and for pain and suffering if their case meets certain minimum conditions. Seven states, including Utah, require that you meet a minimum dollar threshold to be able to bring a lawsuit on 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, motorists may choose to reject the lawsuit threshold on their insurance policy and keep their right to sue for any auto-related injuries.
Personal Injury Protection (PIP)
Personal Injury Protection is also known as, “No Fault” coverage. This means the insurance package covers auto accident related injuries to you, your passengers, pedestrians, moped riders, and bicyclists, regardless of who’s at fault. Benefits of having PIP is that it would save you time. No blame is accessed and payments are usually made quicker towards medical or lost of income. Also, dialogue is only between you and your insurance company.
Property Damage Liability (PD)
Property Damage Liability Coverage comes in handy when you damage someone else’s property with your vehicle. Usually it’s someone’s car, but it can apply to other property such as buildings, utility poles, fences and garage doors. Minimum coverage is $10,000 per accident.
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 categorized by similar factors such as which make, model and year of vehicle driven, vehicle usage, and driving record.
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.
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 while anyone else is a third party.
The cutoff point, which, if met, allows the injured person to file a lawsuit to attempt to recover damages for bodily injury, such as “pain and suffering,” from the driver who caused the accident.
The purpose of the tort law is to redress a wrong doing to a person by awarding them monetary damage as compensation.
Uninsured/Underinsured Motorist Coverage (UM)
Uninsured Motorist Coverage will cover you and passengers for medical expenses, lost wages, as a result of an accident by an at-fault driver who does not have insurance. Underinsured Motorist Coverage is when you’re in an accident with an at-fault driver whose liability limits are too low to cover damage or medical expenses.