If you live in a state with no-fault insurance, the third party’s personal injury protection policy covers losses up to a certain amount, and the at-fault driver’s bodily damage liability policy covers costs above that amount. Note that 12 states and Puerto Rico have no-fault laws, so if you live in a state with a traditional tort insurance system, the at-fault driver’s medical insurance will cover their own injuries or those of passengers, and their bodily damage liability coverage will cover third-party injuries.

A threshold is a set of conditions under which another driver can sue you for injuries for which you were at fault if you live in such a state. The threshold can be a verbal threshold (in verbal terms) or a monetary threshold (amount of medical bill, for instance) and is determined by the severity of the injury.