We shall discuss a few of the commonly used auto insurance related words in the following article. Emphasis will be laid upon trying to convey the technicality in common man’s jargon.
Actual cash value: it is the actual present value of the automobile which would be incurred in order to replace it. But this value is not same as the ex showroom value, it is that value minus the depreciated value.
Benefit: it is the actual cash value that a person receives on filing a claim with the auto insurance company.
Bodily injury liability: it is the reimbursement that an insurance company will pay to all the persons injured in an accident. The insurance company which pays the money will be the one associated with the person at fault.
Claim: it is the request for money that is filed by the insurance holder with the insurance company after an accident.
Collision: it is that type of coverage which will cover all damages and injuries sustained due to a collision. The said collision could be with another vehicle, an inanimate object like tree or lamp post or a wall etc.
Comprehensive: it is that coverage that extends beyond collision to include exigencies like fires, theft, earthquakes, war, riots, vandalism or other acts of god.
Deductible: it is that portion of the losses which you agree to pay for in the case of an accident. Lower deductibles mean that you have to pay higher premiums and vice versa.
Endorsements: any change to the original insurance agreement policy is called an endorsement. It could be a change in the deductible or even an extra driver.
Exclusions: these are exigencies that are not covered by your insurance policy.
Extraordinary medical coverage: this is the sort of coverage that you will need in case you have run out of your normal medical coverage and auto insurance coverage. In cases where you are hospitalized for a long term, this will kick in.
Full coverage: this simply means that you have complied with all the state laws regarding auto insurance. It does not mean that you are indemnified from losses in case of an accident.
Income loss coverage: this is the coverage which will reimburse you for all the lost money due to inability to work after having met with an accident.
Indemnity: it is a certain sum of money that will be paid in case of a certain loss that has been incurred.
Limits: it is the maximum amount of money that your insurance company will pay out in case of any exigency. There are also minimum limits that specify the coverage that you have to own in a particular state.
No fault insurance: this is a clause which states that it does not matter who was at fault, your auto insurance company will pay up the cost of injuries and damages. Many states have a no fault policy which enforces every driver to have no fault insurance.
Property damage liability: it covers you for all the damage related to property. This could include damage to vehicles, infrastructure or any other inanimate object.
SR-22: it is a document which can be shown as proof in case of an accident. It is a proof of financially being responsible in the event of an accident.