Insurance Glossary. Terms You Need to Know.
Bodily Injury Liability: Physical injury or death to a third party for which the policyholder is legally liable. This coverage is commonly referred to as “BI” and is usually written together with Property Damage Liability (see definition below).
Collision Coverage: This coverage pays for the damage and loss of use of the policyholder’s vehicle resulting from an accident caused by collision with another vehicle or object, such as a sign.
Comprehensive Coverage: Pays for damage to or the loss of your vehicle from causes other than collision (e.g.: hail, vandalism, flood, fire and theft, etc.) Your lender may require this coverage if you have a loan on your vehicle.
Deductible: The amount predetermined by the policyholder that must be paid out-of-pocket before the insurance company will pay toward a loss.
Gap Insurance: An optional coverage that will pay the difference between the value of the vehicle at the time of a total loss and the amount remaining on the loan for the vehicle.
Insured: Those persons covered by the automobile insurance policy. Examples of an insured are the policyholder (also called the “named insured”), resident relative and someone using the vehicle with permission.
Medical Payments: This coverage pays for medical and funeral expenses resulting from an accident regardless of fault. Medical Payments coverage also will cover injuries to passengers in your car or someone else’s car you are driving with permission as well as injuries sustained in an auto accident by you or a family member.
Other-than-collision: Commonly known as “comprehensive,” this coverage pays for the damage and loss of use of the policyholder’s vehicle resulting from an accident caused by an event other than a collision or overturn. Such events may include theft, vandalism and fire.
Physical Damage: A collective term commonly used to describe types of coverage that apply to damage to your vehicle. These types of coverage include collision and other-than-collision (a.k.a. “comprehensive”)
Property Damage Liability: Damage to someone’s physical property, including loss of use, for which the policyholder is legally liable. This coverage is commonly referred to as “PD” and is usually written together with Bodily Injury Liability.
Rental Reimbursement: An optional coverage that will reimburse the policyholder for the cost of a rental car if required due to a covered loss. This coverage may pay part or all of the cost of a rental car.
Underinsured Motorist: Similar to Uninsured Motorist, this coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who does not have enough insurance to pay for the injuries.
Uninsured Motorist: This coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who is uninsured or flees the scene of the accident.
Custom/Non-factory Equipment Coverage: Covers customized features, such as those found on conversion vans, as well as non-factory items such CD players, cellular phones and CB radios.
Towing and Labor Coverage: Reimburses you for towing expenses when your vehicle must be towed to a repair shop or to another location because it is not drivable or is damaged.
Liability Coverage: This coverage pays others for damages from an auto accident that you cause. It also pays for a lawyer to defend you if you are sued for damages that you cause. There are two kinds of liability coverage:
Bodily Injury and Property Damage
Bodily Injury Liability Coverage–Pays for claims and lawsuits by people who are injured or die as a result of an accident you cause. It compensates others for pain, suffering and economic damages, such as lost wages.
Property Damage Liability Coverage–Pays for claims and lawsuits by people whose property is damaged as a result of an auto accident you caused.
Umbrella Liability Insurance: This is a policy that “floats” above your other coverage. You must have a certain amount of liability coverage, such as auto and homeowners, before you can buy an umbrella policy. This coverage kicks in if you are sued for an amount that is more than the liability coverage of your auto policy.
Emergency Roadside Service: ?Almost all insurance companies offer emergency roadside service. Sometimes they fall under different names such as a motor club or roadside assistance. Basically, these plans can give you help for a variety of roadside problems. Basic roadside emergency services usually include: lock-out services, towing, trip interruption coverage and other travel planning benefits, with varying cost limits.
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