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January 31, 2024

Understanding Basic Automobile Insurance Terms

Automobile Insurance Basics-Understanding Insurance Terms
Navigating insurance can be complicated, especially if you’re unfamiliar with the terms used to describe various components of your auto policy.
Here’s a general overview of common terms and types of coverages.

Auto insurance coverage is not only required by law in most states, it can also protect you and others from the cost of repairs, medical bills and more.  Not sure where to start? An independent insurance agent can help you select the coverages and limits that are right for you
and your budget.
Premium refers to the amount you pay for your coverage, which can be paid in various ways, including monthly, every six months or annually, depending on the options offered by your insurance company.
Deductible refers to the amount you pay out-of-pocket in the event of an accident or claim before your insurance pays anything.
Coverage Limit The maximum amount your insurance company will pay er person or per occurrence.
Claim A formal request for payment under an insurance policy, filed by a person with an insurance company, after a loss occurs.
Policy Common Types of Auto Coverages
• Liability Coverage: This coverage pays for injuries you cause to others and damages you cause to their property in an accident. It is mandatory in most states that you buy at least the state-mandated minimum limits, but you also have the option to buy higher limits.
• Bodily Injury Liability: Covers medical care for others who are injured by you or your vehicle.
• Property Damage Liability: Covers damage to someone else’s property caused by you or your vehicle.
• Collision: Covers damage to your own vehicle due to a collision with another vehicle or stationary object.  It does not cover damage to the property of others.
• Comprehensive: Covers damage to your own vehicle from non-collision-related causes, such as theft, fire, vandalism, hitting an animal or natural disasters.
• Underinsured Motorist: Covers damages from an accident caused by a driver who is insured but doesn’t have enough coverage to pay for all resulting medical expenses.
• Medical Payments Coverage (MedPay): Helps pay for medical expenses incurred by you or a household member from a car accident, including when you are a pedestrian, driver or occupant of a vehicle. It also covers medical expenses for anyone else occupying your vehicle at the time of the accident.
• Personal Injury Protection (PIP): Sometimes referred to as “no-fault” insurance, PIP is required in some states.  This coverage pays for medical expenses and lost wages for you and your passengers if injured in an accident, regardless of who is at fault.
• Uninsured Motorist: Covers injuries to you, your household members and others occupying your vehicle, from an accident caused by a driver without auto insurance, or an unidentified driver (e.g. a hit-and-run accident).

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