What are some common terms found in auto insurance policies?
Thursday, May 28th, 2009
Basic auto insurance terminology
Here are some terms that can be found in most, if not all, auto insurance policies.
Benefit – The amount an insurance company pays out when a claim is filed.
Bodily Injury Liability – Type of auto insurance coverage that covers the medical expenses to a third party caused by the policy holder.
Claim – The formal incident report and request for reimbursement that a policy holder files with their insurance company. Depending on your auto insurance carrier, you can file a claim in person, on the phone or online.
Collision – Type of auto insurance coverage that covers damage to the policy holder’s vehicle due to a collision.
Comprehensive (Comp) – Type of auto insurance coverage that covers damage to the policy holder’s vehicle due to things other than a collision, such as fire, theft, falling objects, earthquake and flood.
Deductible – The amount the policy holder agrees to pay in the event of an accident. Low deductibles cause higher premiums and higher deductibles cause lower premiums.
Exclusions – Things outlined in an auto insurance policy that are not covered.
Limits – The cap amount that the insurance company will pay out per person and per occurrence. Check with your state insurance office to be sure you have the minimum mandated limits.
Personal Injury Protection – Also referred to as medical payments coverage, this insurance covers the medical bills and lost wages as a result of injuries to the driver and passengers.
Premium - The amount of money that the policy holder pays for their auto insurance policy. Premiums can be paid monthly, every six months, annually or as often as stipulated by the auto insurance company.
Property Damage Liability – Type of auto insurance coverage that covers the damage that the policy holder causes to a third party’s vehicle or other property.
Uninsured/Underinsured Motorist – Type of auto insurance coverage that pays the driver and passengers for medical bills, pain and suffering and lost wages if the driver at fault has no insurance or not enough insurance.