Auto Insurance Glossary – M Definitions
Mandatory Arbitration
A clause in a car insurance policy which requires claim disputes to be subject to arbitration before being referred to the court system by way of lawsuit. Mandatory arbitration can apply to a dispute between an insurer and an insured, or between two insurers. Mandatory arbitration has the aim of both reducing the workload of the justice system and the costs incurred by the parties to a dispute. Mandatory arbitration, however, does not mean mandatory settlement. If either party to an arbitration process does not accept the determination of the arbitrator then that party can refer the dispute to the courts. Learn how to resolve a dispute with an insurer.
Market Conduct
The conduct of licensed persons and organizations within the jurisdiction in which they are licensed, including insurance agents, brokers, companies and claims adjusters. Market conduct is evaluated in relation to the insurance laws of each state with respect to the marketing, selling, issuing and servicing of insurance policies. State insurance departments maintain market conduct teams which periodically examine the conduct of licensed participants and report on their findings. Those findings are used in enforcement and in fine tuning insurance regulations.
Mediation
An informal and non-binding dispute resolution system which consists of each party to a dispute agreeing to arrange an independent third party to assist them in reaching a mutually-agreeable settlement. Mediators are often professional arbitrators who agree to act in a mediation role. Mediation presupposes a degree of goodwill by each party, including the willingness to compromise to at least some degree in an attempt to reach settlement.
Medical Payments Insurance
Also referred to (incorrectly) as personal injury protection insurance, it forms part of a standard auto insurance policy. Medical payments insurance provides a low level of coverage for medical expenses for a policyholder and his passengers in the event of an accident, regardless of fault. It does not provide coverage to the injured occupants of another vehicle. Personal injury protection insurance is a similar type of insurance which provides all the benefits of medical payments insurance but with greater levels and scope of additional coverage. Learn more about medical payments insurance and personal injury protection.
Merit Rating
A system of insurance premium rating available in some states in which premium rates for auto insurance are determined with reference to an insured’s at-fault claims history and driving record, including traffic violations. The system was established to provide a financial incentive for drivers to maintain a good motor vehicle record.
Monetary Threshold
A quantitative threshold applied in six no-fault states above which a party injured in a car accident has the right to sue the at-fault party for damages. In these states, if the monetary value of the injuries suffered by a person exceeds a set dollar limit (the monetary threshold), then the usual prohibition on personal injury tort claims does not apply. See also verbal threshold.
Moral Hazard
The risk that a party to a contract will act in a manner which is detrimental to another party to the contract, and in a manner in which the party would not act in the absence of that contract. For example, a person who has auto insurance may act in a less careful manner (such as not locking their car) for the reason that the risk of loss is borne by another party (the insurer). Moral hazard tends to increase costs for insurers, and consequent premium rates, as the changes in behavior which result from being insured tends to increase the incidence of loss.
Motor Carrier Act of 1980
The Motor Carrier Act introduced, inter alia, financial responsibility requirements for interstate and intrastate commercial motor vehicle carriers. These requirements include minimum levels of public liability insurance, with proof of that insurance being maintained at each company’s principal place of business. The insurance minima range from $750,000 for nonhazardous property to $5,000,000 for hazardous substances as defined in 49 CFR 171.8.
Motor Home Policy
A customized insurance policy designed specifically for the owners of motor homes. Coverage under motor home policies includes the usual components found in standard auto insurance policies, namely personal liability, medical payments, underinsured and uninsured motorist protection, collision and comprehensive, and additional coverages such as emergency road service. But it also includes components normally found within homeowners insurance policies, such as coverage for personal effects, which is extendable to all permanent residents in the motor home.
Motor Vehicle Record
A Motor Vehicle Record (MVR) is a record of a driver’s driving history as compiled by state authorities. It includes a history of traffic tickets, moving violations, DUI, hit and run and reckless driving offenses, road accidents, license suspensions and revocations, insurance lapses and unpaid fines. State authorities pass MVR data to auto insurance companies licensed in their states, often as part of road safety initiatives and incentive programs based on reduced auto insurance premium rates for safe driving records.
