Auto Insurance Terms and Glossary

Are you confused by all the auto insurance terms and coverages?  Don't worry, you're not alone!  For the most part, automobile insurance terms and phrases are foreign to most people who work outside of the industry.

However, we have compiled a glossary of auto insurance terms to help you navigate the path to greater savings on your car insurance rates.   When you compare car insurance quotes, it will be critical that you understand the various policy coverages and terms associated with each.

The following will help clarify the various aspects of auto insurance policies:

Bodily Injury Liability

Physical injury or death to a third party for which the policyholder is legally liable. This coverage is commonly referred to as "BI" and is usually written together with Property Damage Liability (see definition below).

Collision   

This coverage pays for the damage and loss of use of the policyholder's vehicle resulting from an accident caused by collision with another vehicle or object, such as a sign.

Other-Than-Collision

Commonly known as "comprehensive," this coverage pays for the damage and loss of use of the policyholder's vehicle resulting from an accident caused by an event other than a collision or overturn. Such events may include theft, vandalism and fire.

Physical Damage

A collective term commonly used to describe types of coverage that apply to damage to your vehicle. These types of coverage include collision and other-than-collision (a.k.a. "comprehensive")

Property Damage Liability

Damage to someone's physical property, including loss of use, for which the policyholder is legally liable. This coverage is commonly referred to as "PD" and is usually written together with Bodily Injury Liability.

Deductible

The amount predetermined by the policyholder that must be paid out-of-pocket before the insurance company will pay toward a loss.

Insured

Those persons covered by the automobile insurance policy. Examples of an insured are the policyholder (also called the "named insured"), resident relative and someone using the vehicle with permission.

Medical Payments

This coverage pays for medical and funeral expenses resulting from an accident regardless of fault. Medical Payments coverage also will cover injuries to passengers in your car or someone else's car you are driving with permission as well as injuries sustained in an auto accident by you or a family member.

Rental Reimbursement

An optional coverage that will reimburse the policyholder for the cost of a rental car if required due to a covered loss. This coverage may pay part or all the cost of a rental car.

Under insured Motorist

Similar to Uninsured Motorist, this coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who does not have enough insurance to pay for the injuries.

Uninsured Motorist

This coverage pays for bodily injury sustained by a covered person resulting from an accident with an at-fault driver who is uninsured or flees the scene of the accident.

Gap Insurance

An optional coverage that will pay the difference between the value of the vehicle at the time of a total loss and the amount remaining on the loan for the vehicle.

Take the time to learn the basics of auto insurance and you will be able to compare car insurance quotes for maximum premium savings.  So, find out how easy and convenient shopping for auto insurance can be with a  free auto insurance quote today!