October 10, 2012
Automobile Insurance Terminology
Most states require that a vehicle be insured before it can be driven on public streets and highways. It is important to understand the terminology of your auto insurance policy so that you know that you have the necessary insurance coverages for your area. Take time to review your car insurance to make sure you have what you need.
Deductibles: The deductible is the portion of a covered loss that is your responsibility. The deductible applies to each covered loss. Deductibles vary by state but are typically in the amounts of $100, $250, $500 or $1,000. Usually, the higher the deductible the lower your premiums. Of course, the amount you must pay out of your pocket increase with the higher deductible.
Coverage: There can be many types of coverage included within one single auto insurance policy. Insurance coverage requirements vary by state and usually include the following types of coverage:
Liability: Liability coverage pays for accidental bodily injury and property damages to others when the insured person is legally responsible for an accident. Bodily injury damages include medical expenses, pain and suffering, lost wages and other special damages. Property damage includes damaged property and may include loss of use. Liability coverage also pays defense and court costs.
Personal Injury Protection: Personal Injury Protection is required in some states. It pays medical expenses for covered persons, regardless of fault, for medical treatment due to an auto accident.
Medical Payments: Medical Payments Coverage is available in most states. It pays medical and funeral expenses for covered persons, regardless of fault, when those expenses are related to an auto accident.
Collision: Collision coverage pays for damage to a covered vehicle caused by collision with another object or automobile.
Comprehensive: Comprehensive coverage pays for loss of or damage to a covered vehicles, not caused by a collision or accident. Examples include loss caused by fire, wind, hail, flood, vandalism, theft or hitting an animal.
Uninsured Motorist: Uninsured Motorist coverage pays damages when a covered person is injured by an auto accident caused by a driver who does not have liability insurance.
Rental Reimbursement: Rental Reimbursement pays car rentall expenses when your auto is disabled due to an accident.
Emergency Road Service: Emergency Road Service pays expenses incurred for having your auto towed as a result of a breakdown.
Who is covered under an auto policy?
Your policy usually covers you, your spouse and other relatives who live in your household and others who have permission to drive one of your covered vehicles.
