A Users Guide For Insurance Jargon
Insurance can be a confounding subject for most people. The content of this article will help to clarify some of the basic concepts involved in motor insurance.
To fully understand the concepts below, it will help you to acknowledge and understand the concept of legal liability as it pertains to an auto accident. In every accident, blame can be assigned to one or both parties to the accident. Sometimes the circumstances are complicated, and the clear lines of liability are blurred, but for the purposes of this discussion, we will talk in terms of a driver who is at fault for an accident and one who is not. Both the at-fault driver and the innocent driver are subjected to potential injury and property damage when an auto accident occurs.
Here is a list of the basic types of car insurance coverage:
Bodily Injury Liability
Often people are injured in a car accident. Bodily injury liability refers to the legal responsibility of an at-fault driver to compensate the innocent injured victim of an accident. In this respect, Bodily injury liability coverage protects the person with the insurance contract, also known as the policyholder. The protection is rendered in the form of payments that prevent the at fault driver from having to give up assets in order to meet any legal obligation to pay the injured person.
Property Damage Liability
When a person causes an auto accident, property damage usually results. Property Damage Liability refers to the at-fault party’s legal responsibility to compensate some else for property that was damaged because of negligence.
Medical Payments
This term commonly refers to that aspect of an insurance policy designed specifically to pay for medical bills incurred by injured parties. Often times, this covers insured parties for injuries they sustained in an accident regardless of any legal liability.
Uninsured and Underinsured Motorist
In some countries, automobile liability insurance is required and there are statutory minimum limits that must be maintained to legally operate a vehicle. In other areas, automobile insurance is subsidized through the government and in some cases, there are no liability insurance requirements. Uninsured and Underinsured Motorist insurance was designed for situations where the at-fault party in an automobile accident has inadequate or no insurance to cover an injured victim. It is an extra item that a policyholder can purchase and it will pay benefits to the policyholder if they become a victim in an accident with someone who does not have adequate insurance.
Physical Damage – Collision
The term “physical damage” as it pertains to an insurance policy refers to benefits that will be paid to a policyholder. Typically, a deductible applies under the physical damage portion of your policy. A deductible is an amount that the customer has to pay toward vehicle repairs before the insurance company will pay. Under the “collision” portion of physical damage coverage, benefits are paid the insured to repair the vehicle in the event of an accident. Collision benefits as defined under an auto insurance policy only paid to the policyholder and not to any other victims. As indicated above, property damage liability is designed for those situations.
Physical Damage – Comprehensive
Much like collision coverage, comprehensive benefits are only available for the policyholder’s vehicle. The difference however is that comprehensive covers cause of damage other than collision like fire, hail, or theft.
Motor insurance coverage has far more issues than can be enumerated in an article such as this, but knowledge of the foundational issues outlined above is a perfect stepping stone to your next meeting with an insurance agent or broker so that you know what questions to ask about your next automobile insurance policy.