Insurance Terms - Personal Automobile
DISCLAIMER -
The abbreviated outlines of coverage provided in this site are not intended to
express any legal opinion as to the nature of insurance coverage. The terms
shown on this site provide only the most basic and general description of terms
used by the insurance industry. Please read your policy for specific details of
coverage. ONLY your policy provides coverage.
The first thing to know is that there is no
such insurance term as “Full Coverage”. Each coverage line is separately
selected and purchased; from liability to physical damage coverage.
Liability Coverage
The liability coverage of the personal auto policy provides protection against
legal liability arising out of the ownership, maintenance, or use of any
insured automobile. The insuring agreement agrees to pay damages for bodily
injury or property damage for which the insured is legally responsible because
of an automobile accident resulting from the ownership, maintenance, or use of
a covered auto. The insuring agreement also states in addition to the payment
of damages for which the insured is legally liable for, the insurer also agrees
to defend the insured for all legal defense cost. The
defense cost is in addition to the policy limits.
Medical Payments Coverage
The insuring agreement states that the insurer will pay all reasonable and
necessary medical and funeral expenses incurred by an insured because of bodily
injury caused by an accident. The insured is the named insured and any other
person occupying a covered auto. These payments are made without regard to
fault.
Uninsured Motorist
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. These benefits are paid under the named insured's policy.
Underinsured Motorist
This coverage is added to supplement the Uninsured Motorist Coverage, the
coverage applies only when the other driver has liability limits at the time of
an accident, but the liability limits carried may be insufficient to pay for
damages for which the driver is responsible. 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. The two coverages normally must be purchased together.
Any Automobile
Coverage is provided for any auto, including autos owned by the insured and
autos the named insured hires or borrows from auto rental businesses (liability
only).
Collision Coverage
This coverage provides protection against loss or damage to a covered auto
resulting from the impact with another vehicle or object. Collision losses are
paid regardless of fault.
Comprehensive Coverage
Comprehensive coverage provides protection against loss or damage to a covered
auto resulting from loss other than a collision or upset.
Rental Reimbursement
The insured can pay an additional premium for rental reimbursement coverage.
Rental reimbursement pays the cost of renting a substitute auto for replacement
of any covered auto that has suffered a covered loss. The daily and maximum
limit for this coverage varies among insurers.
Towing and Labor
When this coverage is added, the insurer pays for towing
and labor costs each time a covered auto is disabled, up to a stated amount.