When it comes to Car insurance, you are bombarded with choice. It’s easy to just get into to the habbit of sticking with your same provider, isn’t it? I mean all these car insurance terms and policies take time to understand. But if you want to make good decisions regarding your car insurance coverage, and which 20 or so car insurance providers you want to go with, it is important to understand the workings of the policy. To do that, you should learn the lingo of the car insurance policy.
Before discussing specific policy terminology, it will help to understand the concept of negligence and legal liability. When an accident happens, most often human error of some kind is involved. The error may be the result of one driver, or a both. Sorting this out is sometimes the job of the police, sometimes the insurance company, and sometimes the civil court. For the purposes of this discussion, we will assume the term “at fault driver” means the driver that caused the accident, and the “innocent driver” is one that had no fault in the accident. The “at fault driver” would be the negligent party.
Here are some terms you will find in your auto insurance policy:
Bodily Injury Liability
This section of coverage address injuries sustained by people in the accident. It will pay other people to whom you injure because of your negligence. Claims for bodily injury will often include medical bills, lost wages, extra expenses and pain and suffering. The limits for this coverage are often the highest limits in the policy, and there are typically minimum limits imposed by law.
Property Damage Liability
If you cause an accident where nobody is injured, it is likely that you will have caused property damage. Property damage includes damage to other cars, buildings, fences, or any other property.
Medical Payments
This term applies to a section of coverage specifically designed for people who are injured in your car, or who are pedestrians. It will pay medical expenses for the driver and occupants regardless of liability. In other words, if you cause an accident, medical payments coverage will provide benefits to you under your own policy even though the accident was your fault. This is commonly referred to as Personal Injury Protection or PIP.
Uninsured and Underinsured Motorist
If you are involved in an accident caused by somebody that has little or no insurance coverage, and no assets, your uninsured and underinsured motorists coverage will be triggered and will pay benefits to you in place of benefits you should have been able to receive from the at fault party.
Physical Damage – Collision
This section of the policy will pay for damage to your car sustained by a collision. It will pay you regardless of whose fault the accident is but your policy deductible will be subtracted from your claim. In the event that your car is a total loss, the company will only pay the fair market value of the car.
Physical Damage – Comprehensive
Comprehensive coverage is designed to pay for damage to your vehicle other than collision damage. This can include fire, theft or vandalism damage.
If you are aware of the foundational issues outlined by this terminology, car insurance coverage will be easier for you to fully understand which will help you choose the best coverage for your needs.