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Glossary of Auto Insurance Terms
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| Automobile Insurance |
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| Updated |
Jun 10, 2004 21:21:19 |
| Rating |
 101 ( -14 -13.86% ) |
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Description:
Protects the insured against all losses involving automobiles. Types/extent of coverage vary fromstate-mandated bodily injury liability, property damage, medical payments, and the physical coverage from collision/comprehensive.
Collision
Covers losses from damage to the car, caused by a collision with another vehicle or object (or its upset). Does not cover bodily injury or property damage from the collision. The maximum amount of collision protection is usually based on the wholesale value of the vehicle.
Collision Deductible
The amount you pay before the insurance company reimburses
you for the loss covered in your collision policy. The larger the collision/comprehensive deductible, the lower the cost of the premium.
Comprehensive
Physical damage coverage for the car, caused by anything that is not a crashvandalism, fire, flood, falling objects, wind, hitting an animal, glass breakage, etc. On many policies, this is now termed " other than collision" coverage.
Deductible
The amount you pay for a covered loss before the insurance company starts to cover expenses.
Drive-Other-Car Endorsement
Can provide auto coverage to individuals named in the endorsement, while they are driving cars not owned by the individuals, and not named in policy.
Exclusion
A policy's provision that denies coverage for certain specific things. Familiarize yourself with a policy's exact exclusions.
Extended Non-Ownership Liability
This attachment to a personal policy provides broader liability coverage for the specific individuals named. If attached, it covers non-owned vehicles for the regular use of the insured, vehicles that carry people or property for a fee, and broader business use of vehicles.
Family Auto Policy
Has largely replaced a personal auto policy, and is a packaged policy that provides legal liability protection bodily injury and property damage to others, injury to insured and vehicle occupants, and vehicle damage itself.
Fleet insurance
A contract written for a number of vehicles. A fleet is usually 5 or more vehicles.
Gap Insurance
When leasing or financing a car, this coverage provides for the difference between the amount you are covered for in collision/comprehensive, and the amount needed to pay off the lease or finance contract balance. Without gap insurance, that difference is the driver's responsibility.
Good Student Discount
Good grades have proven to equal good driving. Many insurers give good students special discounts.
Liability Coverage
Coverage for money you're legally obliged to pay because a court has found that driver responsible for injuries to another person's property or body. Also covers your legal defense in court. Family members listed as drivers on the policy, or driving the car with your permission, are covered by liability. Liability insurance will not pay for injuries to your own family members in the car-that's covered by medical auto.
Medical Payments Insurance
Covers initial medical expenses for you, members of your family, or passengers riding in the car, incurred in an accident-- regardless of fault. This policy also covers you and members of your household if you're a passenger in a car that's been in an accident, or if you're walking and struck by a car.
Motor Vehicle Record (MVR)
The official record of a driver's accidents or traffic violations. Used to determine policy rates, and apply special discounts.
No-Fault Insurance
Many states have no-fault laws enabling an accident victim to collect directly from their insurer (for medical/hospital) no matter who was at fault. Victims can still sue the other party if damages exceed a certain stated limit. Colorado, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, Puerto Rico and Utah have versions of no-fault provisions.
Personal Auto Policy
A simplified and revised version of the Family Auto Policy, and the most common policy sold in the US.
Personal Injury Protection (PIP)
The no-fault benefits in states that have No-Fault laws. PIP usually covers benefits for medical expenses, accidental death/funeral, and loss of work income.
Premium
The amount owed to the insurance company every year in exchange for coverage.
Property Damage
Coverage that pays to repair or replace other people's property that has been damaged by you or someone else who is covered by your policy. This does not cover your vehicle(s). Liability and property damage grouped together are often referred to as 'liability insurance.'
Radius of Operation
Key figure for setting rates for autos owned by a business, with set limits for each rate.
Safe Driver Plan
A commonly-used system where points are given for tickets and accidents-each point adds a percentage rate increase.to the rating factor.
Threshold Level
The point that the insured can bring legal action under a No-Fault Auto Plan. Many plans prohibit suits unless medical bills exceed a certain figure, or serious injury or death occurs.
Towing Costs
Optional coverage, which pays towing costs (usually a fixed dollar limit) for a disabled vehicle.
Transportation Expenses
In the event of a car's theft, this coverage pays for transportation expenses (rental. etc.) for the insured. Daily and maximum dollar limits are set, and coverage usually begins 4 hours after theft.
Uninsured Motorist Coverage
This covers your personal injury and the damage to your property if you're struck or injured by an uninsured driver. Covers hit-and-run accidents, and is required by most states.
Underinsured Motorist Coverage
Covers property damage and bodily injury when the amount of damage or harm exceeds the other party's liability limits. Kicks in when the other party's liability resources are exhausted.
Unsatisfied Judgment Fund
A number of states have laws that allow for reimbursement to a person who is hurt in an accident and has been unable to collect from the party at fault. |
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