Glossary of Auto Insurance Coverages
Types of auto insurance coverage
Bodily injury liability coverage is typically mandatory, and helps pay for physical injury and death caused to others by the driver responsible for an accident.
This coverage can pay for costs such as medical bills, loss of income, and pain and suffering, but only to parties to whom the insured is legally liable. It also provides legal representation for the policyholder in the case of a lawsuit.
Most states set minimum levels of bodily injury liability coverage that drivers must have.
Collision coverage is for physical damage to your car when it collides with certain objects, such as a tree or another vehicle. While this type of coverage is not always required by law, your lender or leaseholder may require it.
You’ll be offered different deductible amounts for collision coverage. Be sure to pick an amount you can afford. The deductible is the amount you must pay out of pocket in the event of a covered loss.
Comprehensive coverage is for automobile damage from a covered loss other than a collision, such as fire, theft, severe weather, floods, vandalism or contact with animals, or falling objects.
Comprehensive coverage can also pay to fix your windshield if something cracks it.
You’ll be offered different deductible amounts for comprehensive coverage. Be sure to pick an amount you can afford. The deductible is the amount you have to pay out of pocket in the event of a loss.
Together, collision and comprehensive are often referred to as “physical damage” coverages.
Sometimes called "med pay," medical payments coverage helps compensate reasonable and necessary medical or funeral expenses that result from bodily injury or death after an accident—regardless of who is at fault.
You may be asked to select the “limits” of medical payments coverage, which is the maximum amount the insurance company will pay for covered losses.
PIP is for reasonable and necessary medical expenses, lost wages, and other damages from an accident—regardless of who is at fault. PIP could cover the policyholder and anyone else living in the same household, as well as non-related passengers, and pedestrians harmed in the accident. PIP is not available in every state.
Property damage liability coverage is typically mandatory and helps pay for damage you do to someone else's car or property when you are at fault. This coverage helps protect those found to be legally liable in an accident.
Almost every state requires drivers to carry property damage liability coverage but the minimum amount of insurance you need varies from state to state.
When you choose uninsured motorist liability coverage and you're involved in an accident with another driver who has no insurance, your insurance company could pay for covered damages up to the limits you chose when you bought the policy.
If the other driver has some coverage but not enough to pay for the damage they caused, then underinsured motorist liability coverage could apply.
This material is for general informational purposes only. These definitions are broad descriptions of generally used insurance terms. They are not intended to alter or amend any insurance contract in any way, and these terms may mean something different in your insurance policy than how they are defined here. All statements are subject to the terms, exclusions and conditions of the applicable policy. You must check an actual insurance policy for a complete description of all coverage terms and conditions applicable to it. In the event of a disagreement between the definitions we are providing in this glossary and an insurance policy, the terms of your current policy will apply.
