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Car Insurance Terms Glossary

For those of us that do work in the insurance industy, alot of the terms can be hard to understand. Here are some of the most used terms dealing with auto insurance and what they mean.

Liability Insurance

If you are involved in an accident, you may be held as legally accountable, or “liable,” for any property damages (PD) or bodily injuries (BI) that occur to the other party; these damages can be charged to your basic liability insurance. Liability insurance coverage is designed to protect the insured if any lawsuits are filed against them. If you only have liability insurance and are judged as at-fault, liability insurance will not pay for your medical or repair expenses.

Collision Coverage

Collision is optional on most policies and covers damage that occurs when a car collides with another object due to your fault. Examples of collision include rollovers, striking structures,, or hitting a pothole in the road that causes severe damage to the vehicle. Make sure you read the fine print on any policy because property damage is not usually covered under the collision coverage but under the property damage coverage.

Medical Payments Coverage

Medical payments coverage is used to cover the medial costs for you and your passengers in your vehicle at the time of an accident. In no fault states, this coverage is usually optional.

Comprehensive Coverage

Comprehensive coverage usually covers damages and theft when no driver fault is involved. Examples include, falling tree limbs, act of God such as tornado or hurricane, theft, and vandalism. A deductible generally does apply in the event of an incident.

Uninsured / Underinsured Motorists Coverage

It is possible that you could be involved in an accident with someone who does not have any auto insurance or not enough coverage. Uninsured Motorists coverage pays the medical payments for you and your passagers that are involved in an accident with someone who is either not insured or under insured.

Hopefully we have cleared up some of the confusion that is caused by these terms. In the event of accident having insurance can be a real lifesaver. Drive safe!

 

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