Auto Insurance Coverage Definitions

Executive Edge Insurance, Merced META DATA DATA

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Common Auto Insurance Coverage Definitions

​Liability Limits​​

Applies to: All policies.

The Liability Limit is the maximum dollar amount your insurance policy will cover for liability.

For example, if your auto insurance has liability limits of 25/50/25, the maximum dollar amount your policy will pay is $25,000 for a person injured in an accident, a combined total of $50,000 for all people injured in a single accident, and $25,000 for property damage. Minimum liability limit is the minimum amount of auto liability insurance you’re required to have in your state and it doesn't cover much more than a bumper.

​Bodily injury liability

Applies to: auto, motorcycle and umbrella insurance.

Helps pay for bodily injury expenses, like hospital bills and medical care, that you may be held responsible to pay if you cause an accident that injures someone else. Notice the word “HELPS”. What this part of your insurance does is directly related to the limit you’ve chosen (see above explanation of liability limits). If you tap someone’s bumper and they get a headache, there is a chance your insurance policy will cover all of the damage. But if an accident which you are at fault for is the cause of more significant injury, there is also a chance you could be under insured and therefore, the limit of your policy only “helps” pay for their injuries.​

​Physical Damage Coverage (Property Damage)

Applies to: auto, motorcycle, classic car, boat and RV insurance.

Physical damage is a general term that includes both comprehensive and collision coverage for the OTHER car, not your car. This is one of the coverage limits required by law and does not cover your car at all. The coverage for YOUR car is under Collision.​

​Collision coverage

Applies to: auto, classic car, motorcycle and RV insurance.

Pays to repair damage to your vehicle that is caused by an accident involving other vehicles and objects like guard rails, sign posts, trees and buildings. It does not cover damage to another driver’s vehicle.​

​Comprehensive coverage

Applies to: auto, classic car, motorcycle and RV insurance.

Pays to repair or replace your vehicle if it is stolen, vandalized or damaged in some way other than in a collision. Includes loss or damage from fire, flood, falling objects, wind, hail and collision with an animal.​

​Med Pay

Applies to auto, home, classic car, boat, motorcycle, RV. Medical payments helps cover hospital bills and medical care expenses for you or your passengers injured in an accident, no matter who is at fault. MedPay for boat also includes injuries from water-skiing and wake-boarding.​

​Deductible

Applies to: every type of policy.

The amount of money you agree to pay out-of-pocket for a claim is called your deductible. The deductible you choose often affects how much you pay for your insurance. A higher deductible usually means a lower insurance bill. In the case of a covered loss, you’ll only be required to pay your deductible, and the insurance company will cover the excess, up to the amount specified in your policy. For example, if the total cost to repair your boat is $1,000 and you have a $500 deductible on your boat insurance policy, you’ll need to pay $500 of the $1,000.​

​Uninsured Motorist

Applies to: auto, classic car, motorcycle, RV and umbrella insurance.

Helps pay for damages associated with bodily injury or death from an accident caused by an uninsured, underinsured or hit-and-run driver. Specifics of what is covered by these terms can vary from state to state. It may also cover you if you are hit as a pedestrian. For Landlord Protection: Medical payments is part of premises liability and helps cover hospital bills and medical care expenses for guests if they are injured on your rental property.​

​Loan and Lease protection

Applies to: auto, motorcycle, and RV insurance.

Loan and lease protection covers the difference between how much is left on your loan or lease and how much your car, motorcycle or RV is actually worth if it’s declared a total loss. It is also called guaranteed auto protection (GAP) when applied to auto insurance.​

​Loss of Use

Applies to: auto, classic car, and RV insurance.

For vehicles: Loss of use means you are unable to drive your car or RV while it is being repaired.

​Roadside Assistance

Applies to: auto, classic car, motorcycle, RV and boat insurance. Roadside Assistance will help you change a flat tire, deliver gas, oil or other essential fluids like radiator and brake fluid, jump start your battery and send out a locksmith if you’re locked out of your car. Motorcycle Roadside Assistance also includes trip interruption coverage which helps pay for lodging, food and alternate transportation.​

​Umbrella Policy

It's a policy of its own, but is sometimes allowed as an endorsement to an auto or home policy.

An umbrella insurance policy is an additional layer of liability coverage that may cover you when your other insurance policies, such as homeowner’s and auto, have exhausted the maximum amount they will pay for liability claims. *This policy is what would cover you if you do have the big accident that leaves people gravely injured. Common limits are $1,000,000 and higher. The policy is not ridiculously expensive either.

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