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prolly named veronica or sarah
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Simple English definitions for legal terms
gap theory
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A quick definition of gap theory:
The gap theory is a rule in insurance that says if someone causes an accident and has insurance, but their insurance doesn't cover all the damages, the injured person can use their own underinsured motorist coverage to make up the difference. This means that even if the person who caused the accident has insurance, they may still be considered underinsured if their coverage isn't enough to pay for all the damages.
A more thorough explanation:
Definition: In insurance, the gap theory is the principle that a person who causes an accident will be considered underinsured if their liability insurance coverage is legally enough but less than the injured party's underinsured-motorist coverage. This principle allows the injured party to use their underinsured-motorist coverage.
Example: Let's say that John causes an accident that results in $50,000 worth of damages to Jane's car. John has liability insurance that covers up to $30,000 in damages. However, Jane has underinsured-motorist coverage that covers up to $50,000 in damages. In this case, John is considered underinsured, and Jane can use her underinsured-motorist coverage to cover the remaining $20,000 in damages.
The example illustrates the gap theory because John's liability insurance is legally enough, but it is not enough to cover all of the damages caused by the accident. Therefore, Jane can use her underinsured-motorist coverage to fill the gap between John's insurance coverage and the total amount of damages.