Some Terms Used by the Insurance Industry

Collision Coverage

This coverage provides protection against the upset of your auto or non-owned auto or a collision with another vehicle or object. Collision losses are paid regardless of fault.

Comprehensive Coverage

This coverage provides protection against any loss or damage to a covered auto resulting from loss other than a collision or upset, or a loss specifically excluded. This coverage also provides for supplemental payments for transportation expenses in the event of total theft of a covered auto or a non-owned auto. The auto must be insured for comprehensive or specified cause of loss coverage. Coverage begins forty-eight hours after a theft of a covered auto. Payments end when the auto is returned to use or the insurer pays for its loss.

Extended Transportation Expense Coverage (Rental Reimbursement)

This coverage applies when a covered auto or non-owned auto is withdrawn from use more than twenty-four hours due to a loss, other then theft. The insuring agreement agrees to pay up to the stated amount for expenses incurred in renting a vehicle. The coverage usually carries a per day limit and a maximum amount limit.

Liability Coverage

The liability coverage of the personal auto policy provides protection against legal liability arising out of the ownership or operation of an automobile. The insuring agreement agrees to pay damages for bodily injury and/or property damage for which the insured is legally responsible because of an automobile accident. The liability limit can be written as a single limit that applies to both bodily injury and property damage. The policy can also be written with split limits in which the limits of insurance for bodily injury and property damage are stated separately. The most common policies are written with split limits. The insuring agreement also states that in addition to the payment of damages for which the insured is legally liable, the insurer also agrees to defend the insured for all legal defense costs. The defense cost is in addition to the policy limits.

Personal Injury Protection (PIP)

This is an endorsement that adds no-fault benefits. No-Fault means that in the event of an automobile accident, each party collects from his or her own insurer regardless of fault. No-fault benefits are limited to the injured person's actual economic loss, and are paid as specified by the law of the insured's state. Payment could be made for such losses as loss of earnings resulting from bodily injury and medical and funeral expenses. Other expenses can also be considered. The PIP endorsement is only available in certain states with No-Fault Laws. The endorsement applies only to bodily injury and not to property damage. No-Fault Laws vary widely from state to state.

SR-22

An SR-22 is a certificate of insurance between the insurance company and the Department of Motor Vehicles. This certificate indicates that you are insured for the state mandated miminum liability limits, and that if you cancel the insurance policy for any reason, the insurance company will give a 10 day notice to the Department of Motor Vehicles (SR-26) that you are no longer insured. You will need an SR-22 if the Department of Motor Vehicles decides to suspend your driving priviliages. The period of times you would need this SR-22 is determined by the Department of Motor Vehicles.

Towing and Labor Coverage

This coverage pays for towing and labor cost each time a covered auto or non-owned auto is disabled, up to the stated amount.

Underinsured Motorist Coverage

Underinsured motorist coverage applies when a negligent driver has liability limits at the time of an accident, but the liability limits carried may be insufficient to pay for damages that the negligent driver is responsible for. This is when the insured's underinsured motorists coverage would apply and payment for the difference could be made. The two coverages are mutually exclusive and do not overlap or duplicate each other. An insured can collect under one coverage or the other depending on the situation, but not under both.

Uninsured Motorist Coverage

This insuring agreement pays for bodily injury to an insured who is injured by an uninsured motorist, a hit-and-run driver, or a driver whose insurer becomes insolvent. Some states offer coverage for property damage as part of the uninsured motorist coverage. Usually when property damage is added a deductible would apply.