Auto Insurance: Important Definitions
Legally, every car owner in United States must be covered under some type of auto insurance as stated by the Department of Motor Vehicles or DMV. This protects the owner of the car against damage to himself or his car, as well as protects other people from damages he may inadvertently cause.
Auto Insurance Coverage defines the responsibilities and obligations of the policy holder (the person who insures his car) in case his car is damaged or stolen, or he is involved in a car accident.
The following are important definitions:
Property Coverage: this describes the amount of coverage available to a policy holder whose car was damaged in an accident, or through other means, such as vandalism. It also includes the theft of his car. Obviously this is an option every car owner should want to obtain.
Liability Coverage: this term involves ones legal responsibility for bodily injuries and for property damage caused by him. This assures the policy holder that whatever happens, the insurance company will protect him - to some extent - from bodily or property damages he has caused.
Medical Coverage: this term defines how much money the insurance company would be willing to pay for injuries and necessary hospitalization that were sustained during an accident, as well as the costs of rehabilitation afterward. At times it may also include wages that were lost by the injured person while he is incapacitated.
The following are standard policies:
There are numerous types of auto insurance policies that exist to compensate for damage or loss sustained, and expenses incurred, by the car owner in cases of loss, injury or property damage. Here are several types of such policies:
Third Party: this is the most basic insurance policy available and protects a policy holder in the event he accidentally damages someone or their property. It is also the cheapest car insurance available.
Fire and Theft: this type of policy protects a car owner from situations where his car is either burnt or stolen, but it does not protect him from other situations, such as property damage or medical injuries.
Collision: this type of policy covers the cost of repairs of the insured car even if the policy holder is responsible for the accident that caused the damage.
Personal Injury Protection (PIP) or Medical Payments (MedPay): this type of policy covers medical bills and lost wages of the driver and any passenger that were in his car during a car accident. This occurs even in the event that the driver was responsible for the accident.
Comprehensive: this type of insurance offers the most protection to the policy holder, and covers everything from accidents, to auto theft, to fire damage, to act of god (vandalism, hurricane, flood). It can even cover the cost, at least partially, of medical expenses suffered during an accident and of items stolen from a car. Unsurprisingly, this is also the most expensive car insurance.
Specialized policies:
There are many types of special auto insurance plans, for special scenarios. Here are several examples.
Classic car insurance: covers a car that is older than 25 years. In principle it is equivalent to a standard comprehensive car insurance, however, it may have a limitation on the number of miles the owner can drive per year.
Rental Reimbursement: this type of policy simply insures a policy holder in case his car is unavailable - he is given a replacement rental car for this period.
Even if you have the best and most expensive auto insurance policy, it is crucial you are familiar with all the fine print, as you don't want to have unpleasant surprises when the time comes. For example, when a car is stolen, some insurance plans only cover 80% of the cost of a new car (this aims to prevent fraud by car owners who wish to get rid of their cars). - 21393
Auto Insurance Coverage defines the responsibilities and obligations of the policy holder (the person who insures his car) in case his car is damaged or stolen, or he is involved in a car accident.
The following are important definitions:
Property Coverage: this describes the amount of coverage available to a policy holder whose car was damaged in an accident, or through other means, such as vandalism. It also includes the theft of his car. Obviously this is an option every car owner should want to obtain.
Liability Coverage: this term involves ones legal responsibility for bodily injuries and for property damage caused by him. This assures the policy holder that whatever happens, the insurance company will protect him - to some extent - from bodily or property damages he has caused.
Medical Coverage: this term defines how much money the insurance company would be willing to pay for injuries and necessary hospitalization that were sustained during an accident, as well as the costs of rehabilitation afterward. At times it may also include wages that were lost by the injured person while he is incapacitated.
The following are standard policies:
There are numerous types of auto insurance policies that exist to compensate for damage or loss sustained, and expenses incurred, by the car owner in cases of loss, injury or property damage. Here are several types of such policies:
Third Party: this is the most basic insurance policy available and protects a policy holder in the event he accidentally damages someone or their property. It is also the cheapest car insurance available.
Fire and Theft: this type of policy protects a car owner from situations where his car is either burnt or stolen, but it does not protect him from other situations, such as property damage or medical injuries.
Collision: this type of policy covers the cost of repairs of the insured car even if the policy holder is responsible for the accident that caused the damage.
Personal Injury Protection (PIP) or Medical Payments (MedPay): this type of policy covers medical bills and lost wages of the driver and any passenger that were in his car during a car accident. This occurs even in the event that the driver was responsible for the accident.
Comprehensive: this type of insurance offers the most protection to the policy holder, and covers everything from accidents, to auto theft, to fire damage, to act of god (vandalism, hurricane, flood). It can even cover the cost, at least partially, of medical expenses suffered during an accident and of items stolen from a car. Unsurprisingly, this is also the most expensive car insurance.
Specialized policies:
There are many types of special auto insurance plans, for special scenarios. Here are several examples.
Classic car insurance: covers a car that is older than 25 years. In principle it is equivalent to a standard comprehensive car insurance, however, it may have a limitation on the number of miles the owner can drive per year.
Rental Reimbursement: this type of policy simply insures a policy holder in case his car is unavailable - he is given a replacement rental car for this period.
Even if you have the best and most expensive auto insurance policy, it is crucial you are familiar with all the fine print, as you don't want to have unpleasant surprises when the time comes. For example, when a car is stolen, some insurance plans only cover 80% of the cost of a new car (this aims to prevent fraud by car owners who wish to get rid of their cars). - 21393
About the Author:
Theodore Hoffstrader has been wrestling for years with Auto Insurance matters, and has learned a lot from his trials. In this article he discussed a couple Auto Insurance Basics. To view more articles that will help you better understand Auto Insurance procedures and possibly save you money, visit his site, the Auto Insurance Information Highway.
posted by X - Men @ 2:56 AM
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