Auto Insurance - Some Terms You May Hear

When considering Auto Insurance, you may hear terms you are not totally familiar with. A few examples are listed below. If you have more questions about these terms, or others, contact an Independent Insurance Agent. Evidence of Insuranceability: To qualify for a particular policy at a particular price, companies have the right to ask for information about driving and credit history, for example. An insurance company will use this information - the evidence of insurability - in deciding if your application for insurance is acceptable and at what premium rate. Insurance Exclusions: Items or conditions that are not covered by the insurance contract. Liability Insurance: An auto insurance coverage that pays for injuries to the other party and damages to the other vehicle resulting from an accident the policy holder caused. It also pays if the accident was caused by someone covered by the policyholder's policy, including a driver operating the car with their permission. Tort: A private wrong or harm (other than a breach of contract) committed against another, resulting in legal liability. A tort is either intentional or accidental (negligent). Automobile liability insurance is purchased to protect one from suits arising from unintentional torts. Limit of Liability: The most an insurance company agrees to pay in the case of a loss. Comprehensive Coverage (physical damage other than collision): Pays for damage to or loss of your automobile from causes other than accidents. These include hail, vandalism, flood, fire, and theft. Collision Coverage: Covers loss to the insured person's auto caused by its collision with another vehicle or object. Gap Insurance: Insurance that pays the difference between the actual cash value of a vehicle and the amount still to be paid on the loan. Some gap policies may also cover the amount of the deductible. Personal Injury Protection (PIP): An automobile insurance coverage mandated by law in some states, but not in Texas. The statues typically require insurers to provide or offer to provide first-party benefits for medical expenses, loss of income, funeral expenses and similar expenses without regard to fault. Bodily Injury Benefit Coverage: Pays for bodily injury or death to a third-party when you are at fault in an accident. Named Driver Exclusion: An endorsement to an auto policy that provides that a policy does not cover accidents when a specifically named person is the driver. Named Insured: Any person, firm or corporation designated by name as the insured person(s) in a policy. Uninsured/Underinsured Motorist(UM/UIM) COVERAGE: Auto insurance coverage that pays for the policyholder's injuries and, in some states, property damage caused by a hit-and-run driver or a motorist without liability insurance. It will also pay when medical and car repair bills are higher than the other driver's liability coverage. Usage: Refers to the primary function or purpose in which you intend to operate your vehicle. For example, if you primarily drive your car to and from work, the usage is considered "commute"; if you are self-employed and you primarily drive to see customers, the usage is considered "business." For more information on these terms, and others, refer to posts in this blog on the topics relating to Auto Insurance, or, contact an independent insurance agent.
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