AUTOMOBILE INSURANCE
As you know protecting your car can be complicated. Without the proper coverage’s, and the proper amount, you could be in for an expensive surprise. When you buy Auto Insurance, you’re not just protecting your vehicle, you’re protecting your way of life. Auto Insurance is a contract providing bodily injury, property, liability, medical expense and physical damage coverage for vehicular activities. Below are some definitions of the different types of coverage’s that are available to purchase on your insurance policy. Some coverage’s are required by law and some are optional.
Liability Coverage (required by law)
This covers damages that an insured becomes legally obligated to pay resulting from bodily injury or property damage to others.
Medical Payments (not required)
Pays for reasonable medical expenses incurred by a covered person for bodily injury.
Comprehensive Coverage, other than collision (not required)
In auto insurance, a broad physical damage coverage that covers all property losses except collision and those perils or property that are specifically excluded.
Collision Coverage (not required)
A type of auto insurance that covers physical damage occurring when the insured auto strikes another auto or stationary object. It may also include upset overturn of the insured auto.
Uninsured Motorist (not required)
Will pay compensatory damages that an insured is entitled to collect (from his own policy) if he suffers bodily injury as a result of being struck by another driver who does not have auto liability insurance.
Underinsured Motorist Coverage (not required)
This coverage pays an insured who suffers bodily injury when struck by an at-fault drivers who has inadequate liability coverage to pay damages.
Rental Car Reimbursement (not required)
Covers renting a car if your car is not drivable, or while your car is being repaired because of a covered accident.
Gap Insurance (not required)
An automobile insurance option, available in some states, that covers the difference between car’s actual cash value when it is stolen or wrecked and the amount the insured owes the finance company. Typically used for leased cars.
DEFINITIONS
Aggregate Limits
The total amount an insurer will pay for all covered losses occurring during a specified period (e.g. one year policy period). Aggregate limits are commonly used in commercial general liability policies.
Binder
A temporary policy.
Declarations
Policy pages containing information used to identify the insured, the covered risk, coverage limitations, premium required, policy number and the policy inception and expiration dates.
Deductible
The amount of loss paid by the policy holder. Either a specified dollar amount, a percentage of the claim amount, or a specified amount of time that must elapse before benefits are paid. The higher the deductible, the lower the premium charged for the same coverage.
Exclusion
A provision in an insurance policy that eliminates coverage for certain risks, people, property classes, or locations.
Occurrence
An accident is a single event whereas an occurrence involves a continued exposure.
Personal Lines
Property/casualty insurance products that are designed for and bought by individuals, including homeowners and automobile policies.
Policy
A written contract for insurance between and insurance company and policy holder starting details of coverage.
Policy Period
The date and time specified in the declarations for when coverage begins and ends.
Premium
The price of an insurance policy, typically charged annually or semiannually.
Unearned Premium
The portion of a premium already received by the insurer under which protection has not yet been provided. The entire premium is not earned until the policy period expires, even though premiums are typically paid in advance.
Earned Premium
The portion of premium that applies to the expired part of the policy period. Insurance premiums are payable in advance but the insurance company does not fully earn them until the policy period expires.