Auto Insurance Dictionary
Automobile Insurance - A contract,
called an insurance policy, that helps you pay for damages you have caused
others to incur resulting from your owning or operating an automobile.
Bodily Injury Liability
Insurance (BIL) - An insurance policy or portion of an insurance
policy that helps you pay medical costs, physical rehabilitation, funeral
expenses or loss of income benefits to any person or persons that were injured
as a result of your owning and/or operating an automobile. Pain and suffering as
well as legal expenses also often covered. Note this type of insurance does do
cover any of the expenses of the owner and/or operator.
Collision Insurance - This
type of auto insurance helps you pay for any damage to your vehicle that is the
result of an accident with another vehicle or object. (i.e. tree, pole, traffic
barrier etc.) If the accident involves another automobile, and you are not
at fault your insurance company may decide to pursue recovery of damages from
the other person's insurance company. Most collision insurance policies have an
up front deductible amount the you must pay before your insurance company begins
to pay.
Comprehensive insurance - This
kind of automobile insurance normally helps you pay for damages to your vehicle
from causes other than collision with other vehicles. Examples would include
weather related such as a hail storm, tornado or hurricane, falling objects such
as rocks and vandalism. Theft insurance is often part of your comprehensive
policy as are many of the Supplementary coverage options. Of all the types of
car insurance, comprehensive insurance is most detail oriented and should be
reviewed in detail as it is here that many insurance providers "cut a
few" corners to reduce your premium costs.
Liability Insurance - Is
insurance that covers any expenses others may incur as a result of an accident
with you as an owner and or operator. Must liability policies have a bodily
injury provision and a property damage provision.
Medical Payments (MP) - The portion
of an insurance policy that pays for your medical expenses f or those of any
passengers in your vehicle, without regard to who is found at fault, that are the result
of your owning and/or operating an automobile.
Property Damage Insurance (PD)- An
insurance policy or portion of an insurance policy that helps you pay for
repairing or replacing the physical properties of others that were damaged as a result
of your owning and/or operating an automobile. Note the property of the owner
and/or operator is not covered by this type of insurance.
Rating - This
is the process your insurance company performs when it determines what it will
charge for your auto insurance policy should you decide to purchase it from
them.
Single limit - This defines
with a single figure how much damage your auto insurance policy covers for a
specific accident regardless of the number of individuals making claims. Medical
payment policies or provisions are usually single limit.
Split limit - This defines
not only the extent of the damages the car insurance company will for a specific
event but it also sets a limit as to how the extent of the injuries covered per
person. As an example most Bodily Injury policies are split limits, on your
policy your coverage may be recorded like this - BIL 25000/50000 - this means
that your policy will pay up to 25,000 dollars per injured party up to 50,000
dollars for the accident. So if 3 people are injured and they incur damages of
15,000 each your insurance company would pay full damages.
However if they each suffer damages of 20,000 dollars for 60,000 total you would
be liable for the additional 10,000 dollars.
Supplementary coverage -
These are like "added features " to you car insurance policy and can
help you pay for a variety of auto related expenses. Examples of these include
payment for a rental car while yours is in for repair as the result of an
accident or an event that falls under your comprehensive coverage. Towing, Bail
Bonds, out of town accommodations, and loss of earnings resulting from accident
where you were found to be at fault. Supplementary insurance coverage usually
has clearly stated limits as to how much the insurance company will pay.
Underwriting - is the
decision process an insurance company performs when it considers your
application for auto coverage.
Uninsured/Underinsured Motorist (UIM/UNM)
- This kind of car insurance protects you and any passengers or
occupants in your car in the event you are involved in an accident with an uninsured
or underinsured owner and or operator. The uninsured motorist is obviously one driving
or operating a car with no insurance. An underinsured motorist is one who has
proper car insurance but has liability limits that are exceeded by your or your
passenger's injury claims. This type of insurance policy also can provide you
with financial protection in the event you are involved in an accident with a
hit and run driver. It should be noted that experts estimate that 14% of all
motor ehicles on the road today are uninsured.
We have done our best to
provide you easy to understand meanings for these various insurance terms and
phrases however these are not intended to be nor should they be
considered legal definitions. Always consult with your state's insurance
department or commissioner's office.
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