Auto Insurance Glossary – V Definitions

Valuation

An estimate of the market value of an item, commonly for insurance purposes, and typically undertaken with reference to the recent sale prices of like items in the same market. With respect to personal auto insurance, the most commonly occurring valuation is undertaken for actual cash value, particularly for total loss claims. In those claims the actual cash value is the assessed market value of the vehicle immediately prior to the event which caused its total loss. If the insurance company and the policy owner are unable to agree on the actual cash value of a totaled vehicle, then either may invoke the provisions of the policy’s appraisal clause, as a precedent to any other measure open to either party in the settlement of the claim.

Verbal Threshold

One of two tort thresholds applicable to states which have enacted no-fault auto insurance laws. If a no-fault state has implemented a verbal threshold with respect to auto accidents, then the no-fault laws can be overridden by right of redress through the tort system by a person who has suffered bodily injury to a severe degree. That degree of severity is prescribed in explicit terms in the laws of each such state (hence ‘verbal’). Of the nine states which have enacted no-fault laws, three states have adopted verbal thresholds, namely Florida, Michigan and New York. A verbal threshold is also referred to as a qualitative or descriptive threshold, See also quantitative threshold.

Vicarious Liability

The legal liability which a person has for the acts of another. For example, in most states a parent could be held vicariously liable for personal injury or property damage if a child of the parent crashes the parent’s car while using the car with the parent’s implied or express consent. This liability can arise either through specific statute or through the common law rule of ‘negligent entrustment’. Similarly, employers can be held liable for the actions of their employees while driving company vehicles on company business. In some states, the owners of rented or leased vehicles have a vicarious liability for the acts of drivers of such cars.