There are a lot of common words that will pop up in personal insurance conversations, knowing them will help you feel confident that you’re getting what you want.
Auto Vocab List:
Coverage
Auto insurance typically provides 4 key features:
- Liability Coverages (for injuries to others and damage to their property)
- Damage Coverages (to your car or cars)
- Medical Coverages (we’ll leave the visuals to you)
- Uninsured Motorist Coverages (when someone w/o enough insurance hits you)
This is not comprehensive; there are a variety of coverage options available that vary by state and provider. All coverages are subject to the limits, terms and conditions of the actual policy you purchase.
Deductible
In the event of a loss, a deductible is the amount that you must pay out-of-pocket before your insurance kicks in. A higher deductible could lower your premium, but it could also hurt when an accident happens.
Collision Coverage
This is an additional feature that covers the damage to your car if it hits another car, object, or overturns on its own. A deductible applies to this coverage.
Comprehensive Coverage
This is an additional feature that pays for damage to your car if it is stolen or damaged by certain causes other than collision, such as fire, theft, hail, hitting a deer or vandalism. A deductible applies to this coverage as well.
Bodily Injury
Liability coverage generally pays damages for bodily injuries to the driver and passengers of the other vehicle, as well as passengers in your own car, when you are responsible for an accident. It also provides coverage to defend you if you are sued after an auto accident.
Property Damage
Liability coverage generally pays for damages to another person’s property (e.g. their car, yard, or house if you really make a mess) when you are responsible for an accident. It also protects you in a lawsuit over property damage due to an auto accident.
Medical Payments
Auto Insurance policies generally cover you, household relatives, and your passengers’ medical expenses resulting from injuries sustained in an auto accident. It also covers you as a pedestrian if you are hit by a vehicle.
Personal Injury Protection
Some states have Personal Injury Protection (PIP) instead of, or addition to, medical payments coverage. Sometimes we call this: No-Fault Coverage. PIP generally pays for medical expenses, funeral expenses, loss of income, and other expenses for injuries or death due to bodily injury as the result of a car accident.
UN-insured or UNDER-insured Motorist
Bodily injury coverage generally pays for damages to you and your passengers when someone else causes your accident who has either inadequate or no insurance at all. This coverage varies greatly by state (and does not cover you if you want to punch the person for not having insurance). In some states it may be a combined coverage, while other states may offer it as two separate coverages (e.g. one for uninsured motorists and one for underinsured motorists).
