Auto Insurance: Important Definitions
United States law dictates that every car owner must be covered under some type of auto insurance. This law exists in order to protect the car owner against bodily damages he may suffer in an accident as well as damages caused to his car. This also protects other individuals from damages that he may accidentally cause.
Auto Insurance Coverage determines the obligations and the responsibilities of a person who insures a car (a policy holder). This defines what happens what happens in case there is damage to his car, his car is stolen, or he is involved in a car accident (which may or may not be his fault).
Here are some important definitions:
Property Coverage: this term generally covers the damage made to a policy holders car by whatever means, and also includes the theft of his car. Clearly this is a necessity when it comes to insuring ones car, and every car owner should be insured against property damage.
Liability Coverage: this covers the the policy holder's legal responsibility for property damage or bodily injures he causes. Basically, it protects the policy holder than no matter what, the insurance company will protect him - to an extent defined in his policy - from property or bodily damage caused by him.
Medical Coverage: this defines the amount of coverage the insurance provider is willing to provide for the treatment of injuries and hospitalization sustained during an accident, as well as the costs of rehabilitation. In some cases, it also covers the wages lost by the injured person while he cannot not work.
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 bare minimum policy a car owner must possess in order legally comply with US laws. Unsurprisingly, it is also the cheapest car insurance available. Put simply, this plan protects the policy owner in case he accidentally damages someone or their property.
Fire and Theft: this type of policy offers more protection to the policy holder, and will cover the cost of a car that is burnt or is stolen. Note that it does not cover any damages incurred if involved in a car accident.
Collision: if this option is included, the policy holder is not financially responsible for repairing his car when it is involved in a car accident, even in the even he caused it. Pretty good option to have.
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.
There are also more specialized types of 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: in the event a policy holder's car is unavailable (i.e. it is in repairs as a result of an accident), this policy ensures that the car owner gets a replacement rental car for this period.
No matter which policy you may have, it is essential that you are intimately familiar with its details as this could have significant financial repercussions when the time comes. For instance, some auto insurance plans only reimburse 80% of the value of a stolen car - the reason being, to avoid fraud (car owners from staging theft of their own cars). - 23211
Auto Insurance Coverage determines the obligations and the responsibilities of a person who insures a car (a policy holder). This defines what happens what happens in case there is damage to his car, his car is stolen, or he is involved in a car accident (which may or may not be his fault).
Here are some important definitions:
Property Coverage: this term generally covers the damage made to a policy holders car by whatever means, and also includes the theft of his car. Clearly this is a necessity when it comes to insuring ones car, and every car owner should be insured against property damage.
Liability Coverage: this covers the the policy holder's legal responsibility for property damage or bodily injures he causes. Basically, it protects the policy holder than no matter what, the insurance company will protect him - to an extent defined in his policy - from property or bodily damage caused by him.
Medical Coverage: this defines the amount of coverage the insurance provider is willing to provide for the treatment of injuries and hospitalization sustained during an accident, as well as the costs of rehabilitation. In some cases, it also covers the wages lost by the injured person while he cannot not work.
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 bare minimum policy a car owner must possess in order legally comply with US laws. Unsurprisingly, it is also the cheapest car insurance available. Put simply, this plan protects the policy owner in case he accidentally damages someone or their property.
Fire and Theft: this type of policy offers more protection to the policy holder, and will cover the cost of a car that is burnt or is stolen. Note that it does not cover any damages incurred if involved in a car accident.
Collision: if this option is included, the policy holder is not financially responsible for repairing his car when it is involved in a car accident, even in the even he caused it. Pretty good option to have.
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.
There are also more specialized types of 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: in the event a policy holder's car is unavailable (i.e. it is in repairs as a result of an accident), this policy ensures that the car owner gets a replacement rental car for this period.
No matter which policy you may have, it is essential that you are intimately familiar with its details as this could have significant financial repercussions when the time comes. For instance, some auto insurance plans only reimburse 80% of the value of a stolen car - the reason being, to avoid fraud (car owners from staging theft of their own cars). - 23211
About the Author:
Theodore Hoffstrader has been struggling 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 comprehend Auto Insurance and may save you money, visit his site, the Auto Insurance Information Highway.
posted by X - Men @ 2:59 AM
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