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Damages Reduction Provision

"Damages Reduction" Provision

Definition

A term used in connection with uninsured and underinsured motorists (UM/UIM) coverage to refer to limit of insurance provisions that apply (in some states) to set out how UM/UIM coverage is affected by the existence of other types of coverage (e.g., auto medical payments, workers compensation) that may apply as well. Under damages reduction, any amount payable for damages under the coverage is reduced by all sums paid under another type of coverage, as specified in the applicable UM/UIM endorsement.

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