Understanding Automobile Insurance

Automobile Insurance Adjuster

Trying to understand all the terms used in relation to insurance, particularly automobile insurance, can be a difficult task. In many cases, terms relating to your automobile insurance are defined within your policy. In other cases, words come up in conversation with your insurance agent. Or perhaps, after you are involved in a car accident.  Some of which, are not defined in your policy. A glossary of common terms related to automobile insurance will give you a better idea of what is being said. However, your particular insurance policy may define these terms in a different manner, which will make a difference when submitting a claim.

Automobile Insurance Terms –

  • Additional Insured:
    Individuals or entities not specifically named as insured within the policy.  However, they are included as attachments, known as endorsements, to the policy. They are provided a degree of protection. In some states, an additional insured will treated differently from an additional named insured. This is an additional insured actually named within the policy itself, whom all of the rights and responsibilities of the policy apply.
  • Bodily Injury Liability:
    Automobile insurance coverage that applies when you are legally liable for injuring other people in an auto accident. Bodily injury liability provides payments to those injured individuals and pays your legal defense costs as well. Coverage of this kind, is often combined with property damage liability, called “liability insurance.”
  • Claim:
    Notification that a policyholder makes to an automobile insurance company to recover losses covered by an insurance policy.
  • Collision Insurance:
    Automobile coverage under a policy that pays for damage to, or loss of, your own automobile from a collision with another object or vehicle. Collision insurance does not cover bodily or personal injury, and it may not cover other property damage liability arising out of the collision.
  • Comprehensive Insurance:
    Automobile coverage that reimburses you for damage to your own car from causes other than a collision, upset, or general wear and tear. Comprehensive insurance may provide coverage for hail, flood, theft, mischief, damage from animals, falling objects, explosions, earthquakes, and many other events.
  • Deductible:
    Amount of the loss that you must pay before the insurance company begins to pay under the policy. For example, if you have a $500 deductible and have been in an accident in which $3,500 in damage to your car occurred, you must pay the first $500 before the insurance company pays the remaining $3,000.
  • Drive-Other-Car Endorsement (DOC):
    Referred to as an “Other-Car Endorsement,” A policy addition that allows coverage that will protect individuals named in the endorsement. Only when driving cars not owned by those individuals or named within the policy.
  • First-Party Coverage:
    Compensation you receive under your own insurance policy.  As opposed to receiving payment from someone else’s policy, such as the person who caused an accident. Examples of first-party coverage include collision and comprehensive insurance. In which, your own insurance company pays you for losses to your own car.
  • Liability Insurance:
    Automobile coverage that pays others who sustain bodily injury or experience property damage caused by you or someone else covered under your policy.
  • Loss:
    The root of an insurance claim. In order to have a claim, there must first be a loss, such as damage to a vehicle or bodily injury. Insurers may also refer to a loss as a payment made on behalf of an insured to cover such damage.
  • Motor Vehicle Record (MVR):
    A written record of a particular driver’s accidents and traffic violations. MVR’s are reviewed when an insurance agent gives out a quote for automobile insurance rates. The more accidents and violations you have in your MVR, the higher your premiums are likely to be.
  • No-Fault Protection:
    Automobile coverage available in many states that pays you, or those people covered under your policy. This is often for medical expenses or injuries that occur as the result of an accident, regardless of who was at fault in causing the accident.
  • Personal Injury Protection (PIP):
    Part of an automobile insurance policy, in many cases a no-fault policy. It provides protection against personal injury and related losses, as opposed to damage to your vehicle. Up to a specific per-person dollar amount. PIP may include benefits for medical expenses, loss of work income, accidental death and funeral expenses.
  • Premium:
    An amount of money you pay, either monthly, quarterly, or yearly, to maintain your automobile insurance. Failure to pay your premium will lead to cancellation of your policy.
  • Property Damage Liability:
    Automobile Insurance that protects you, and pays on your behalf, for automobile-related damage that you cause to another person’s property. Moreover, when damage is jointly offered with bodily injury liability, as it often is, it will be called “liability insurance.”
  • UIM:
    Short for “underinsured motorist” or those fellow motorists whose automobile insurance maximum is insufficient to cover a specific loss. UIM pays you, or those people covered under your policy, for bodily injury losses if the other driver is liable and has coverage that does not fully compensate you for your losses. Thus, the maximum of a UIM recovery is your policy limit.
  • UM:
    Short for “uninsured motorist” or those motorists who do not have any automobile insurance. UM coverage protects the insured against bodily injury losses caused by a negligent motorist who has not obtained insurance coverage.
  • Threshold:
    A term commonly used in conjunction with a modified no-fault plan. Most no-fault plans set a point at which the insured may bring a legal action to recover for losses, such as pain and suffering.  Tort actions are not allowed before reaching the threshold. Typically, when medical bills reaches a certain expense level, or if disfigurement, or death occurs.
  • VIN:
    Short for “vehicle identification number.” Your VIN may come up in the insurance field if there is a question as to the ownership of your car. More specifically, A car’s VIN is a unique number assigned to the car. The VIN is be found, engraved on a metal plate affixed to the dashboard, usually visible through the windshield.

For more information, you can reach Poynter & Bucheri your personal injury attorneys by calling (800) 265-9881.