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 includes several definitions. These definitions determine the responsibilities and obligations of the policy holder, as a car owner, in case of damage to his car, the theft of his car, or an involvement in a car accident.
The following are 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 term applies to the amount of money paid for the hospitalization and treatment of injuries incurred during an accident, as well as the costs of rehabilitation, and wages lost by the injured person during this time of incapacitation.
The next few items 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 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 policy protects the driver and any passengers that were in his car during a car accident, by reimbursing them for medical bills and lost wages. Note that the question who caused the accident is irrelevant for this policy.
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: this policy targets owners of antique cars (cars that are older than 25 years), and is equivalent to a comprehensive car insurance. There are usually extra conditions in the policy, such as a limit on the number of miles the car owner may drive in a year’s time.
Rental Reimbursement: this policy ensures a policy holder that he’ll always have a car to drive in. If his car is damaged (no matter which way), he is entitled to receive a replacement rental car until it is fixed.
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).
Related posts:
- Auto Insurance Policy Guarantees in Canada The Canadian Property and Casualty (P&C) insurance industry is the...
- Choosing Between Regular Auto Insurance And CTP Insurance coverage renewals usually pop up around the time when...
- The Importance Of Car Insurance And Home Insurance As we go on with our everyday lives, we always...
- Auto Insurance Comparison Can Save Hundreds In Cash For many people, auto insurance comparison is rarely used. However,...
- Some Information On Types Of Personal Injury Claims There will be a time wherein you may be involved...
Related posts brought to you by Yet Another Related Posts Plugin.