Finding the right cheap auto insurance quotes and coverage for your needs can be a complex process. One way to make sure you are ready to navigate the waters of purchasing a car insurance policy is to fully understand some of the more common auto insurance definitions related to types of coverage.
When you are involved in an accident, where you are at fault and therefore legally liable for any damages, bodily injury liability (BI) covers compensation for the injury or even death of anyone involved other than the insured driver. Property damage liability (PD) covers damages to another party’s property. In the event that you are sued by someone involved in the accident, both of these coverages pay for the cost of your legal defense. There are certain exclusions that can apply so always refer to the auto insurance definitions provided by your insurance company for more specific details.
Collision and Comprehensive Coverages
In the event that your car is involved in a collision with another object, you will need to have collision coverage which will pay for the damages to your car. In some case collision coverage can extend to a rental car or another car that you are driving at the time of the collision. Comprehensive coverage kicks in if your car is damaged as a result of something other than a collision and typically covers damages due to weather related causes such as fire, wind, and flood. When your car is stolen or vandalized this coverage can also pay for transportation costs and cover expenses due to loss of use.
Full coverage is a commonly used term that is often used to describe the amount of auto insurance coverage on a vehicle. In truth there is no such thing as full coverage. In most cases full coverage is used when the insurance policy covers more than just the minimum state required liability coverage and usually includes some amount of collision and comprehensive coverage. If you are told that a policy includes full coverage, it will be important to read the details of the auto insurance definitions in the policy to understand exactly which coverages are included.
Uninsured and Underinsured Motorist
In the event that you are involved in an accident caused by a driver or car owner that does not have car insurance, Uninsured Motorist Coverage (UM) will pay for injuries to you, your family and occupants of your car to the limit you specify. If the driver who is at fault for the accident has insurance that is not adequate, Underinsured Motorist Coverage (UIM) will pay for the additional costs for injuries, including death, for you and those in your vehicle and Uninsured/Underinsured Motorist Property (UMPD) covers damages to your car up to the limits you select.
A deductible is the amount that you must pay out of your pocket in the event of an accident that results in a claim. Typically you can secure a lower premium by agreeing to pay a higher deductible but keep in mind that a deductible is the amount you will have to pay for each claim that you submit. Purchasing a policy with a higher deductible might pay off for someone with a history of claim free years whereas going with a higher deductible in a family with new drivers could end up costing you much more.
Understanding commonly used auto insurance definitions will help you to purchase the right car insurance coverage for your needs and will give you peace of mind because you will know that you are financially protected in case of an accident or other damage to your car. Exclusions to coverage do apply so always check with your specific insurance company to make sure that you fully understand your policy coverage. Also remember to compare quotes. Doing so will help you save money even on teen car insurance.