10 Auto Insurance Terms You Should Know
Navigating the language of an auto insurance policy can be difficult for most people.
When a claim occurs, the agent and claims adjuster, who are both accustomed to the language of the policy, use terminology that may sound foreign or esoteric to many of us.
This guide will help you familiarize yourself with the language of an auto policy.
These terms are some of the most commonly used words and phrases in an auto policy, but not all of them are covered here.
Bodily Injury Liability Coverage - financial protection that pays people injured in an auto accident that was caused by a policyholder.
This section will pay for pain and suffering and for legal defense costs of an insured person.
Collision Coverage - this pays you for damage to your car if it is damaged in a collision with another vehicle or an object.
Comprehensive Coverage - often referred to as "other than collision", this coverage pays for damage to your car for other causes of loss like fire, theft, etc.
Deductible - an amount that you have to pay before towards a loss before the insurance company will pay any amount.
Depreciation - an amount deducted from the replacement cost when a total loss occurs to a vehicle.
It represents the reduction in value of a car because it has become old, worn out or obsolete.
Exclusions - a section of an auto insurance policy, which outlines what will not be covered.
No Fault Insurance - benefits payable to an insured regardless of fault.
An auto insurance policy usually has two types of no-fault benefits, to include the physical damage portion of the policy and the medical payments section, also known as personal injury protection (PIP) section.
No-fault insurance may be mandated by law in some states, specifically with respect to medical payments coverage.
Personal Injury Protection (PIP) - benefits paid to a policyholder and/or their medical care provider.
This section also affords benefits to occupants of the insured vehicle and pedestrians, which may be struck by an insured vehicle.
In some states, children injured on a school bus are also covered under their parent's personal auto policy.
Property Damage Liability Coverage - financial protection for accidents caused by the policyholder.
The policy will pay for the repair or replacement of damaged property owned by others, on behalf of the policyholder.
Total Loss - an economic definition of a loss in which the repair costs exceed the value of a vehicle.
It is not the best strategy to learn about your insurance policy when you have an accident.
Ideally, you would become familiar with your coverage before that, and a good agent or broker will be able to educate you about your policy and its terminology.
Since this guide is not a complete listing of all of the definitions contained in an auto insurance policy, you should be aware that your policy does contain a section called "definitions" which contains an explanation of several of the terms commonly used throughout the policy.
When a claim occurs, the agent and claims adjuster, who are both accustomed to the language of the policy, use terminology that may sound foreign or esoteric to many of us.
This guide will help you familiarize yourself with the language of an auto policy.
These terms are some of the most commonly used words and phrases in an auto policy, but not all of them are covered here.
Bodily Injury Liability Coverage - financial protection that pays people injured in an auto accident that was caused by a policyholder.
This section will pay for pain and suffering and for legal defense costs of an insured person.
Collision Coverage - this pays you for damage to your car if it is damaged in a collision with another vehicle or an object.
Comprehensive Coverage - often referred to as "other than collision", this coverage pays for damage to your car for other causes of loss like fire, theft, etc.
Deductible - an amount that you have to pay before towards a loss before the insurance company will pay any amount.
Depreciation - an amount deducted from the replacement cost when a total loss occurs to a vehicle.
It represents the reduction in value of a car because it has become old, worn out or obsolete.
Exclusions - a section of an auto insurance policy, which outlines what will not be covered.
No Fault Insurance - benefits payable to an insured regardless of fault.
An auto insurance policy usually has two types of no-fault benefits, to include the physical damage portion of the policy and the medical payments section, also known as personal injury protection (PIP) section.
No-fault insurance may be mandated by law in some states, specifically with respect to medical payments coverage.
Personal Injury Protection (PIP) - benefits paid to a policyholder and/or their medical care provider.
This section also affords benefits to occupants of the insured vehicle and pedestrians, which may be struck by an insured vehicle.
In some states, children injured on a school bus are also covered under their parent's personal auto policy.
Property Damage Liability Coverage - financial protection for accidents caused by the policyholder.
The policy will pay for the repair or replacement of damaged property owned by others, on behalf of the policyholder.
Total Loss - an economic definition of a loss in which the repair costs exceed the value of a vehicle.
It is not the best strategy to learn about your insurance policy when you have an accident.
Ideally, you would become familiar with your coverage before that, and a good agent or broker will be able to educate you about your policy and its terminology.
Since this guide is not a complete listing of all of the definitions contained in an auto insurance policy, you should be aware that your policy does contain a section called "definitions" which contains an explanation of several of the terms commonly used throughout the policy.