Listed below are some important (and often obscure) terms used in the insurance world; for your benefit, you should become abreast of their meanings and the context they can be used in. This way, you van have a clear understanding of all aspects of buying insurance.
Auto Insurance Glossary
These are the definitions to know, according to the American Council of Insurance:
- Bodily Injury Liability: When the policyholder causes injuries to another, this policy will cover medical expenses.
- Claim: When property is lost, damaged, etc, a policyholder will request compensation.
- Collision: This covers damage to the policyholder’s car from any collision. A collision can occur with another car, a curb, light post, etc.
- Comprehensive: For damage to the policyholder’s car that doesn’t involve hitting another car. This can include a variety of things: fire, flood, civil unrest, etc.
- Deductible: The portion of losses that you agree to pay in the event of an accident. Higher deductibles lower premiums significantly, but will come back to haunt you in the case of an accident, especially if you’re at fault.
- Exclusions: If an accident occurs that is not covered by your policy, it is called an exclusion and is not part of your coverage.
- Full Coverage: This indicates that you have all the minimum coverage for your state of residence; it does not necessarily mean you will always be fully covered.
- Income Loss Coverage: This policy will cover the income you lost while injured.
- Limits: The maximum amount of money your insurance company will pay for your losses.
- Medical Payments or Personal Injury Protection (PIP): PIP covers the treatment of injuries to the driver and passengers of the policyholder’s vehicle. On some occasions, it may even cover medical payments and wages that were lost due to an accident. Consult with your agent to see how far your PIP policy will cover you.
- No-Fault Insurance: For the policyholder to receive his/her money, this does not require blame for any problem to assigned.
- Property Damage Liability: Pays for damage the policyholder causes to someone else’s property.
- Tort: The term that describes when someone is deemed legally responsible for injuring another person or damaging his/her property.