Insurance Definitions
Liability Coverage
Liability coverage protects you from lawsuits in the event you are involved in an accident. This coverage provides protection even if you are driving another person's vehicle. There are three main types of Liability Coverage:
Bodily Injury (BI)
Bodily Injury coverage is typically sold as split limits, a limit of each passenger and an overall limit for the accident. For example, if you elect to purchase $100,000/$300,000 coverage, you have the following coverage maximum payouts in the event of an accident.
$100,000 maximum to any individual involved in the accident.
$300,000 maximum payment for all individuals involved in the accident
The minimum limits for BI vary by state and it is suggested that you purchase $100,000/$300,000 unless you are a non-standard driver that has very expensive insurance rates. Always check with your insurance agent about the risks associated with purchasing lower or minimum liability limits.
Medical or Personal Injury Protection (PIP)
This coverage provides protection for medical and / or funeral costs for you in the event of an accident. States are either Medical states or PIP states depending on their state law. Please check with your agent for a complete description on medical coverage and its relation to other existing health / life coverage you may have.
Property Damage
As the name implies, property damage protects your from any damage resulting to a person's car, or other property in the event of an accident. For example, if you purchase $100,000 of Property Damage, the maximum amount paid for damage to other individual's property would be $100,000 for the accident.
Uninsured / Underinsured Motorist
Uninsured Motorist provides coverage for you in the event the other driver does not have insurance at all.
Underinsured Motorist provides liability coverage for you in the event the other driver does not have enough insurance coverage.
What does Collision and Comprehensive Coverage Mean?
These two coverage options provide compensation for damage inflicted to your vehicle in the event of an accident. Collision provides coverage in the event of an accident. Comprehensive provides coverage in the event of car damage from other losses such as storms, theft, and some other non-accident damage inflicted to your car.
Comprehensive and Collision are sold with deductibles. A deductible is the amount you may pay first. After the deductible has been reached, the insurance coverage provides payment for the additional amount of repairs / replacement needed. A typical deductible for Comprehensive and Collision is:
$100 Comprehensive
$250 Collision
It is very important that you consult with your agent to determine the best coverage for you. Depending on your vehicle, age, driving record, income and many other factors, the right coverage will vary.
Disclaimer: This information is intended to provide a brief overview of insurance coverage and is not a substitute for reading the details of your insurance policy and or consulting with an agent.
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