Definition - What does Threshold Level mean?
The threshold level refers to the amount of money or the severity in bodily damage that must be reached as the result of an accident before a policyholder with a no-fault car insurance can file a case against someone.
Insuranceopedia explains Threshold Level
There are two types of threshold levels to consider: monetary and verbal.
Monetary threshold refers to medical bills accumulated due to a car accident that usually exceeds the financial coverage.
Verbal threshold, on the other hand, refers to the extent of the bodily damage caused by the accident and may include dismemberment or death.
The financial excess or the severe injury in these cases can be a basis for legal action. Anything that falls below the threshold can bar a person from filing a case.
The threshold level varies from state to state because insurance laws in the United States are state laws rather than federal ones.