Insurance Terms Glossary
Collision Coverage. If your car collides with another vehicle or object, this coverage pays for the repair of your car. The insurance company is responsible for the repair cost, less the amount of the deductible, for which you are responsible.Comprehensive Coverage. Pays for damage to your car caused by fire, theft, vandalism, windstorm, glass breakage, and other perils not considered a collision. The repair cost is paid by the insurance company, less your deductible.
Deductible. The dollar amount of damage to your car that you are responsible for. Most auto policies have a separate deductible for collision and comprehensive coverage.
Liability Coverage. Pays for injuries caused to others or their property if you or someone else cause an accident while driving your car. Different states have different liability requirements. For example, 25/50/25 means liability limits of $25,000 per person for bodily injury; $50,000 per accident for bodily injury, and $25,000 per accident for property damage.
Medical Expense Coverage. Pays if you and your passengers are injured in an auto accident, regardless of who is at fault. There are different limits you can select, usually in increments of $5,000.
Personal Injury Protection (PIP). This is a formal name for no-fault coverage in states that have mandatory or optional no-fault auto insurance. PIP offers coverage for medical expenses, loss of wages, accidental death and funeral expenses.
Rental Reimbursement Coverage. When this coverage is offered, the company pays for a rental car if your car is disabled and you need a substitute vehicle. Most policies have per day and per loss dollar limitations.
SR-22. An SR-22 is a special document provided by your insurance company that shows proof you have active auto insurance, and meet your state’s Financial Responsibility Laws. States generally require the SR-22 be carried three years, but laws may vary from state to state.
Towing and Labor Coverage. This coverage pays for towing costs if your vehicle becomes disabled. This coverage may also pay for emergency roadside assistance, such as a dead battery or flat tire. This coverage usually is limited by dollar amount per loss.
Uninsured Motorist Coverage. This coverage provides payment if a negligent, uninsured driver injures you or your passengers. Coverage also applies to hit-and-run accidents and to drivers who are underinsured.
Uninsured Motorist Property Damage. Provides payment for the damage to your car if it is caused by an uninsured driver.
